0001671284 false 2021 December 31 Q3 http://fasb.org/us-gaap/2021-01-31#ServiceMember http://fasb.org/us-gaap/2021-01-31#ServiceMember http://fasb.org/us-gaap/2021-01-31#ServiceMember http://fasb.org/us-gaap/2021-01-31#ServiceMember 0001671284 2021-01-01 2021-09-30 xbrli:shares 0001671284 2021-11-04 iso4217:USD 0001671284 2021-09-30 0001671284 2020-12-31 iso4217:USD xbrli:shares 0001671284 2021-07-01 2021-09-30 0001671284 2020-07-01 2020-09-30 0001671284 2020-01-01 2020-09-30 0001671284 us-gaap:CommonStockMember 2020-12-31 0001671284 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001671284 us-gaap:RetainedEarningsMember 2020-12-31 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001671284 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001671284 2021-01-01 2021-03-31 0001671284 us-gaap:CommonStockMember 2021-01-01 2021-03-31 0001671284 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-03-31 0001671284 2021-03-31 0001671284 us-gaap:CommonStockMember 2021-03-31 0001671284 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001671284 us-gaap:RetainedEarningsMember 2021-03-31 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001671284 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0001671284 2021-04-01 2021-06-30 0001671284 us-gaap:CommonStockMember 2021-04-01 2021-06-30 0001671284 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001671284 us-gaap:IPOMember us-gaap:CommonStockMember 2021-04-01 2021-06-30 0001671284 us-gaap:IPOMember us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001671284 us-gaap:IPOMember 2021-04-01 2021-06-30 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-04-01 2021-06-30 0001671284 2021-06-30 0001671284 us-gaap:CommonStockMember 2021-06-30 0001671284 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001671284 us-gaap:RetainedEarningsMember 2021-06-30 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001671284 us-gaap:RetainedEarningsMember 2021-07-01 2021-09-30 0001671284 us-gaap:CommonStockMember 2021-07-01 2021-09-30 0001671284 us-gaap:AdditionalPaidInCapitalMember 2021-07-01 2021-09-30 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-07-01 2021-09-30 0001671284 us-gaap:CommonStockMember 2021-09-30 0001671284 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0001671284 us-gaap:RetainedEarningsMember 2021-09-30 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-30 0001671284 2019-12-31 0001671284 us-gaap:CommonStockMember 2019-12-31 0001671284 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001671284 us-gaap:RetainedEarningsMember 2019-12-31 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001671284 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0001671284 2020-01-01 2020-03-31 0001671284 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0001671284 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0001671284 2020-03-31 0001671284 us-gaap:CommonStockMember 2020-03-31 0001671284 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0001671284 us-gaap:RetainedEarningsMember 2020-03-31 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0001671284 us-gaap:RetainedEarningsMember 2020-04-01 2020-06-30 0001671284 2020-04-01 2020-06-30 0001671284 us-gaap:CommonStockMember 2020-04-01 2020-06-30 0001671284 us-gaap:AdditionalPaidInCapitalMember 2020-04-01 2020-06-30 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-04-01 2020-06-30 0001671284 2020-06-30 0001671284 us-gaap:CommonStockMember 2020-06-30 0001671284 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001671284 us-gaap:RetainedEarningsMember 2020-06-30 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0001671284 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0001671284 us-gaap:CommonStockMember 2020-07-01 2020-09-30 0001671284 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-01 2020-09-30 0001671284 2020-09-30 0001671284 us-gaap:CommonStockMember 2020-09-30 0001671284 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0001671284 us-gaap:RetainedEarningsMember 2020-09-30 0001671284 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 xbrli:pure 0001671284 2021-06-02 2021-06-02 0001671284 us-gaap:IPOMember 2021-06-28 2021-06-28 0001671284 2021-06-28 0001671284 us-gaap:IPOMember 2021-06-28 0001671284 2021-06-28 2021-06-28 0001671284 us-gaap:SeriesAPreferredStockMember 2021-06-28 0001671284 us-gaap:SeriesBPreferredStockMember 2021-06-28 0001671284 us-gaap:SeriesCPreferredStockMember 2021-06-28 0001671284 us-gaap:SeriesDPreferredStockMember 2021-06-28 0001671284 us-gaap:SeriesEPreferredStockMember 2021-06-28 0001671284 bhg:ChangeInRiskAdjustmentEstimateUpdatedRiskScoreDataMember 2021-09-30 0001671284 bhg:ChangeInRiskAdjustmentEstimateUpdatedRiskScoreDataMember 2021-07-01 2021-09-30 0001671284 bhg:CentrumMedicalHoldingsLLCMember 2021-07-01 0001671284 bhg:CentrumMedicalHoldingsLLCMember 2021-07-01 2021-07-01 bhg:healthCenter 0001671284 bhg:CentrumMedicalHoldingsLLCMember 2021-01-01 2021-09-30 0001671284 bhg:CentrumMedicalHoldingsLLCMember 2021-07-01 2021-09-30 0001671284 bhg:CentrumMedicalHoldingsLLCMember us-gaap:TradeNamesMember 2021-07-01 2021-07-01 0001671284 srt:MinimumMember us-gaap:CustomerRelationshipsMember bhg:CentrumMedicalHoldingsLLCMember 2021-07-01 2021-07-01 0001671284 srt:MaximumMember us-gaap:CustomerRelationshipsMember bhg:CentrumMedicalHoldingsLLCMember 2021-07-01 2021-07-01 0001671284 bhg:CentrumMedicalHoldingsLLCMember bhg:ReacquiredContractsMember 2021-07-01 2021-07-01 0001671284 bhg:CentralHealthPlanOfCaliforniaIncMember 2021-04-01 2021-04-01 0001671284 bhg:CentralHealthPlanOfCaliforniaIncMember 2021-01-01 2021-09-30 0001671284 bhg:CentralHealthPlanOfCaliforniaIncMember 2020-07-01 2021-09-30 0001671284 bhg:CentralHealthPlanOfCaliforniaIncMember 2021-04-01 0001671284 us-gaap:CustomerRelationshipsMember bhg:CentralHealthPlanOfCaliforniaIncMember 2021-04-01 2021-04-01 0001671284 bhg:CentralHealthPlanOfCaliforniaIncMember us-gaap:TradeNamesMember 2021-04-01 2021-04-01 0001671284 bhg:CentralHealthPlanOfCaliforniaIncMember bhg:ProviderNetworkMember 2021-04-01 2021-04-01 0001671284 bhg:CentralHealthPlanOfCaliforniaIncMember 2020-07-01 2020-09-30 0001671284 bhg:CentralHealthPlanOfCaliforniaIncMember 2020-01-01 2020-09-30 0001671284 bhg:TrueHealthNewMexicoMember 2021-03-31 2021-03-31 0001671284 bhg:ZipnosisMember 2021-03-31 2021-03-31 0001671284 bhg:ZipnosisMember 2021-01-01 2021-09-30 0001671284 bhg:ZipnosisMember 2021-07-01 2021-09-30 0001671284 bhg:TrueHealthNewMexicoMember 2021-03-31 0001671284 bhg:ZipnosisMember 2021-03-31 0001671284 srt:MinimumMember us-gaap:CustomerRelationshipsMember bhg:TrueHealthNewMexicoMember 2021-03-31 2021-03-31 0001671284 srt:MaximumMember us-gaap:CustomerRelationshipsMember bhg:TrueHealthNewMexicoMember 2021-03-31 2021-03-31 0001671284 us-gaap:TradeNamesMember bhg:TrueHealthNewMexicoMember 2021-03-31 2021-03-31 0001671284 bhg:TrueHealthNewMexicoMember bhg:ProviderNetworkMember 2021-03-31 2021-03-31 0001671284 us-gaap:CustomerRelationshipsMember bhg:ZipnosisMember 2021-03-31 2021-03-31 0001671284 us-gaap:TradeNamesMember bhg:ZipnosisMember 2021-03-31 2021-03-31 0001671284 us-gaap:DevelopedTechnologyRightsMember bhg:ZipnosisMember 2021-03-31 2021-03-31 0001671284 bhg:THNMAndZipnosisMember 2020-07-01 2020-09-30 0001671284 bhg:THNMAndZipnosisMember 2021-01-01 2021-09-30 0001671284 bhg:THNMAndZipnosisMember 2020-01-01 2020-09-30 0001671284 bhg:PremierMedicalAssociatesOfFloridaLLCMember 2020-12-31 0001671284 bhg:PremierMedicalAssociatesOfFloridaLLCMember 2020-12-31 2020-12-31 0001671284 bhg:UniversalCareIncBrandNewDayMember 2020-04-30 2020-04-30 0001671284 bhg:UniversalCareIncBrandNewDayMember 2020-01-01 2020-12-31 0001671284 bhg:UniversalCareIncBrandNewDayMember 2020-01-01 2020-09-30 0001671284 bhg:UniversalCareIncBrandNewDayMember 2020-04-30 0001671284 bhg:UniversalCareIncBrandNewDayMember 2020-05-01 2021-09-30 0001671284 bhg:UniversalCareIncBrandNewDayMember 2021-09-30 0001671284 us-gaap:TradeNamesMember bhg:UniversalCareIncBrandNewDayMember 2020-04-30 2020-04-30 0001671284 us-gaap:CustomerRelationshipsMember bhg:UniversalCareIncBrandNewDayMember 2020-04-30 2020-04-30 0001671284 bhg:ProviderNetworkMember bhg:UniversalCareIncBrandNewDayMember 2020-04-30 2020-04-30 0001671284 us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2021-09-30 0001671284 us-gaap:CorporateDebtSecuritiesMember 2021-09-30 0001671284 us-gaap:USStatesAndPoliticalSubdivisionsMember 2021-09-30 0001671284 us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2021-09-30 0001671284 us-gaap:CertificatesOfDepositMember 2021-09-30 0001671284 us-gaap:MortgageBackedSecuritiesMember 2021-09-30 0001671284 us-gaap:OtherDebtSecuritiesMember 2021-09-30 0001671284 us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2020-12-31 0001671284 us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001671284 us-gaap:USStatesAndPoliticalSubdivisionsMember 2020-12-31 0001671284 us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2020-12-31 0001671284 us-gaap:CertificatesOfDepositMember 2020-12-31 0001671284 us-gaap:OtherDebtSecuritiesMember 2020-12-31 0001671284 us-gaap:CashAndCashEquivalentsMember 2021-09-30 0001671284 bhg:ShortTermAndLongTermInvestmentsMember us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2021-09-30 0001671284 bhg:ShortTermAndLongTermInvestmentsMember us-gaap:CorporateDebtSecuritiesMember 2021-09-30 0001671284 bhg:ShortTermAndLongTermInvestmentsMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2021-09-30 0001671284 us-gaap:OtherDebtSecuritiesMember bhg:ShortTermAndLongTermInvestmentsMember 2021-09-30 0001671284 us-gaap:CashAndCashEquivalentsMember 2020-12-31 0001671284 bhg:ShortTermAndLongTermInvestmentsMember us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2020-12-31 0001671284 bhg:ShortTermAndLongTermInvestmentsMember us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001671284 bhg:ShortTermAndLongTermInvestmentsMember us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2020-12-31 0001671284 bhg:ShortTermAndLongTermInvestmentsMember us-gaap:CertificatesOfDepositMember 2020-12-31 bhg:investment 0001671284 us-gaap:DebtSecuritiesMember 2021-01-01 2021-09-30 0001671284 us-gaap:DebtSecuritiesMember 2020-01-01 2020-09-30 0001671284 2021-04-01 2021-04-01 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:USStatesAndPoliticalSubdivisionsMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:USStatesAndPoliticalSubdivisionsMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:CertificatesOfDepositMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:CertificatesOfDepositMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:MortgageBackedSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:MortgageBackedSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueInputsLevel1Member 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:USStatesAndPoliticalSubdivisionsMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:USStatesAndPoliticalSubdivisionsMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel3Member us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member us-gaap:CertificatesOfDepositMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member us-gaap:CertificatesOfDepositMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CertificatesOfDepositMember 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueInputsLevel1Member 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001671284 us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember 2020-12-31 0001671284 us-gaap:FairValueInputsLevel1Member 2021-09-30 0001671284 us-gaap:FairValueInputsLevel2Member 2021-09-30 0001671284 us-gaap:FairValueInputsLevel3Member 2021-09-30 0001671284 us-gaap:FairValueInputsLevel1Member us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueInputsLevel2Member us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueInputsLevel3Member us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2021-09-30 0001671284 us-gaap:FairValueInputsLevel1Member us-gaap:CertificatesOfDepositMember 2021-09-30 0001671284 us-gaap:FairValueInputsLevel2Member us-gaap:CertificatesOfDepositMember 2021-09-30 0001671284 us-gaap:CertificatesOfDepositMember us-gaap:FairValueInputsLevel3Member 2021-09-30 0001671284 us-gaap:FairValueInputsLevel1Member 2020-12-31 0001671284 us-gaap:FairValueInputsLevel2Member 2020-12-31 0001671284 us-gaap:FairValueInputsLevel3Member 2020-12-31 0001671284 us-gaap:FairValueInputsLevel1Member us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2020-12-31 0001671284 us-gaap:FairValueInputsLevel2Member us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2020-12-31 0001671284 us-gaap:FairValueInputsLevel3Member us-gaap:USGovernmentCorporationsAndAgenciesSecuritiesMember 2020-12-31 0001671284 us-gaap:FairValueInputsLevel1Member us-gaap:CertificatesOfDepositMember 2020-12-31 0001671284 us-gaap:FairValueInputsLevel2Member us-gaap:CertificatesOfDepositMember 2020-12-31 0001671284 us-gaap:CertificatesOfDepositMember us-gaap:FairValueInputsLevel3Member 2020-12-31 0001671284 bhg:ContingentConsiderationLiabilityMember 2020-12-31 0001671284 bhg:ContingentConsiderationLiabilityMember 2019-12-31 0001671284 bhg:ContingentConsiderationLiabilityMember 2021-01-01 2021-09-30 0001671284 bhg:ContingentConsiderationLiabilityMember 2020-01-01 2020-12-31 0001671284 bhg:ContingentConsiderationLiabilityMember 2021-09-30 0001671284 bhg:BrightHealthCareMember 2020-12-31 0001671284 bhg:NeueHealthMember 2020-12-31 0001671284 bhg:BrightHealthCareMember 2021-01-01 2021-09-30 0001671284 bhg:NeueHealthMember 2021-01-01 2021-09-30 0001671284 bhg:BrightHealthCareMember 2021-09-30 0001671284 bhg:NeueHealthMember 2021-09-30 0001671284 us-gaap:CustomerRelationshipsMember 2021-09-30 0001671284 us-gaap:CustomerRelationshipsMember 2020-12-31 0001671284 us-gaap:TradeNamesMember 2021-09-30 0001671284 us-gaap:TradeNamesMember 2020-12-31 0001671284 bhg:ReacquiredContractsMember 2021-09-30 0001671284 bhg:ReacquiredContractsMember 2020-12-31 0001671284 us-gaap:DevelopedTechnologyRightsMember 2021-09-30 0001671284 us-gaap:DevelopedTechnologyRightsMember 2020-12-31 0001671284 us-gaap:OtherIntangibleAssetsMember 2021-09-30 0001671284 us-gaap:OtherIntangibleAssetsMember 2020-12-31 0001671284 us-gaap:CustomerRelationshipsMember 2021-01-01 2021-09-30 0001671284 us-gaap:TradeNamesMember 2021-01-01 2021-09-30 0001671284 bhg:ReacquiredContractsMember 2021-01-01 2021-09-30 0001671284 us-gaap:DevelopedTechnologyRightsMember 2021-01-01 2021-09-30 0001671284 us-gaap:OtherIntangibleAssetsMember 2021-01-01 2021-09-30 0001671284 us-gaap:LineOfCreditMember us-gaap:RevolvingCreditFacilityMember 2021-03-01 0001671284 us-gaap:LineOfCreditMember us-gaap:RevolvingCreditFacilityMember 2021-03-01 2021-03-01 0001671284 us-gaap:LineOfCreditMember us-gaap:RevolvingCreditFacilityMember 2021-08-02 2021-08-02 0001671284 us-gaap:LineOfCreditMember us-gaap:RevolvingCreditFacilityMember 2021-04-01 2021-06-30 0001671284 us-gaap:EmployeeStockOptionMember us-gaap:ShareBasedCompensationAwardTrancheOneMember 2021-01-01 2021-06-30 0001671284 us-gaap:ShareBasedCompensationAwardTrancheTwoMember us-gaap:EmployeeStockOptionMember 2021-01-01 2021-06-30 0001671284 us-gaap:EmployeeStockOptionMember 2021-07-01 2021-09-30 0001671284 2020-01-01 2020-12-31 0001671284 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-09-30 0001671284 us-gaap:RestrictedStockUnitsRSUMember 2021-01-01 2021-09-30 0001671284 us-gaap:RestrictedStockUnitsRSUMember 2020-12-31 0001671284 us-gaap:RestrictedStockUnitsRSUMember 2021-09-30 0001671284 us-gaap:RestrictedStockUnitsRSUMember 2021-07-01 2021-09-30 0001671284 us-gaap:PerformanceSharesMember 2021-01-01 2021-09-30 bhg:vestingTranche 0001671284 us-gaap:PerformanceSharesMember 2020-12-31 0001671284 us-gaap:PerformanceSharesMember 2021-09-30 0001671284 us-gaap:PerformanceSharesMember 2021-07-01 2021-09-30 0001671284 us-gaap:RedeemableConvertiblePreferredStockMember 2021-01-01 2021-09-30 0001671284 us-gaap:RedeemableConvertiblePreferredStockMember 2020-01-01 2020-09-30 0001671284 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-09-30 0001671284 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-09-30 bhg:segment 0001671284 bhg:BrightHealthCareMember 2021-07-01 2021-09-30 0001671284 bhg:NeueHealthMember 2021-07-01 2021-09-30 0001671284 us-gaap:IntersegmentEliminationMember bhg:NeueHealthMember 2021-07-01 2021-09-30 0001671284 us-gaap:IntersegmentEliminationMember 2021-07-01 2021-09-30 0001671284 us-gaap:OperatingSegmentsMember bhg:BrightHealthCareMember 2021-07-01 2021-09-30 0001671284 us-gaap:OperatingSegmentsMember bhg:NeueHealthMember 2021-07-01 2021-09-30 0001671284 bhg:BrightHealthCareMember 2020-07-01 2020-09-30 0001671284 bhg:NeueHealthMember 2020-07-01 2020-09-30 0001671284 us-gaap:IntersegmentEliminationMember bhg:NeueHealthMember 2020-07-01 2020-09-30 0001671284 us-gaap:IntersegmentEliminationMember 2020-07-01 2020-09-30 0001671284 us-gaap:OperatingSegmentsMember bhg:BrightHealthCareMember 2020-07-01 2020-09-30 0001671284 us-gaap:OperatingSegmentsMember bhg:NeueHealthMember 2020-07-01 2020-09-30 0001671284 us-gaap:IntersegmentEliminationMember bhg:NeueHealthMember 2021-01-01 2021-09-30 0001671284 us-gaap:IntersegmentEliminationMember 2021-01-01 2021-09-30 0001671284 us-gaap:OperatingSegmentsMember bhg:BrightHealthCareMember 2021-01-01 2021-09-30 0001671284 us-gaap:OperatingSegmentsMember bhg:NeueHealthMember 2021-01-01 2021-09-30 0001671284 bhg:BrightHealthCareMember 2020-01-01 2020-09-30 0001671284 bhg:NeueHealthMember 2020-01-01 2020-09-30 0001671284 us-gaap:IntersegmentEliminationMember bhg:NeueHealthMember 2020-01-01 2020-09-30 0001671284 us-gaap:IntersegmentEliminationMember 2020-01-01 2020-09-30 0001671284 us-gaap:OperatingSegmentsMember bhg:BrightHealthCareMember 2020-01-01 2020-09-30 0001671284 us-gaap:OperatingSegmentsMember bhg:NeueHealthMember 2020-01-01 2020-09-30 0001671284 bhg:ControllingInterestHolderMember bhg:CentrumMedicalHoldingsLLCMember 2021-07-01
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission File Number: 001-40537

BRIGHT HEALTH GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware | 47-4991296
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
8000 Norman Center Drive, Suite 1200, Minneapolis, MN | 55437
(Address of principal executive offices) | (Zip Code)

Registrant’s telephone number, including area code: (612) 238-1321

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Stock, $0.0001 par value |  | BHG |  | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | o | Accelerated filer | o
Non-accelerated filer | x | Smaller reporting company | o
Emerging growth company | o |  | o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
As of November 4, 2021, the registrant had 628,315,180 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

PART I. | FINANCIAL INFORMATION | 2
Item 1. | Financial Statements | 2
| Condensed Consolidated Balance Sheets (Unaudited) | 2
| Condensed Consolidated Statements of Income (Loss) (Unaudited) | 3
| Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) | 4
| Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited) | 5
| Condensed Consolidated Statements of Cash Flows (Unaudited) | 7
| Notes to Condensed Consolidated Financial Statements | 8
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 4 4
Item 4. | Controls and Procedures | 44
PART II. | OTHER INFORMATION | 45
Item 1. | Legal Proceedings | 45
Item 1A. | Risk Factors | 45
Item 2. | Unregistered Sale of Equity Securities and Use of Proceeds | 46
Item 3. | Defaults upon Senior Securities | 47
Item 4. | Mine Safety Disclosures | 47
Item 5. | Other Information | 47
Item 6. | Exhibits | 47

i

Table of Contents
FORWARD-LOOKING STATEMENTS
This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Statements made in this Quarterly Report that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements, and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. These statements often include words such as “anticipate,” “expect,” “plan,” “believe,” “intend,” “project,” “forecast,” “estimates,” “projections,” “should,” “might,” “may,” “will” and other similar expressions. These forward-looking statements include any statements regarding our plans and expectations with respect to Bright Health Group, Inc. Such forward-looking statements are subject to various risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Factors that might materially affect such forward-looking statements include: a lack of acceptance or slow adoption of our business model; our ability to retain existing consumers and expand consumer enrollment; our ability to contract with care providers and arrange for the provision of quality care; our ability to accurately estimate our medical expenses, effectively manage our costs and claims liabilities or appropriately price our products and charge premiums; the impact of the COVID-19 pandemic on our business and results of operations; the risks associated with our reliance on third-party providers to operate our business; the impact of modifications or changes to the U.S. health insurance markets; our ability to manage the growth of our business; our ability to operate, update or implement our technology platform and other information technology systems; our ability to retain key executives; our ability to successfully pursue acquisitions and integrate acquired businesses; the occurrence of severe weather events, catastrophic health events, natural or man-made disasters, and social and political conditions or civil unrest; our ability to prevent and contain data security incidents and the impact of data security incidents on our members, patients, employees and financial results; and the other factors set forth under the heading “Risk Factors” in this Quarterly Report and Bright Health Group’s prospectus dated June 23, 2021 (File No.333-256286), as filed with the United States Securities and Exchange Commission pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended.
The preceding list is not intended to be an exhaustive list of all of the factors that might affect our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These statements are only predictions based upon our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Other sections of this Quarterly Report may include additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or occur. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in our expectations.
1

Table of Contents
Bright Health Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(Unaudited)

| September 30, 2021 |  | December 31, 2020
Assets |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 956,189 |  | $ | 488,371
Short-term investments | 331,719 |  | 499,928
Accounts receivable, net of allowance of $5,701 and $2,602, respectively | 99,216 |  | 60,522
Prepaids and other current assets | 240,545 |  | 130,986
Total current assets | 1,627,669 |  | 1,179,807
Other assets: |  |  |
Long-term investments | 681,923 |  | 175,176
Property, equipment and capitalized software, net | 30,932 |  | 12,264
Goodwill | 842,301 |  | 263,035
Intangible assets, net | 351,519 |  | 152,211
Other non-current assets | 40,751 |  | 28,309
Total other assets | 1,947,426 |  | 630,995
Total assets | $ | 3,575,095 |  | $ | 1,810,802
Liabilities, Redeemable Noncontrolling Interest, Redeemable Preferred Stock and Shareholders’ Equity (Deficit) |  |  |
Current liabilities: |  |  |
Medical costs payable | $ | 685,045 |  | $ | 249,777
Accounts payable | 95,161 |  | 57,252
Unearned revenue | 34,917 |  | 34,628
Risk adjustment payable | 548,352 |  | 187,777
Other current liabilities | 88,133 |  | 35,847
Total current liabilities | 1,451,608 |  | 565,281
Other liabilities | 56,254 |  | 28,578
Total liabilities | 1,507,862 |  | 593,859
Commitments and contingencies (Note 10) |  |  |
Redeemable noncontrolling interests | 130,029 |  | 39,600
Redeemable preferred stock, $0.0001 par value; 100,000,000 and 166,307,087 shares authorized in 2021 and 2020, respectively; — and 164,244,893 shares issued and outstanding in 2021 and 2020, respectively | — |  | 1,681,015
Shareholders’ equity (deficit): |  |  |
Common stock, $0.0001 par value; 3,000,000,000 and 658,993,725 shares authorized in 2021 and 2020, respectively; 628,133,782 and 137,662,698 shares issued and outstanding in 2021 and 2020, respectively | 63 |  | 14
Additional paid-in capital | 2,823,244 |  | 9,877
Accumulated deficit | (886,333) |  | (515,989)
Accumulated other comprehensive income | 230 |  | 2,426
Total shareholders’ equity (deficit) | 1,937,204 |  | (503,672)
Total liabilities, redeemable noncontrolling interests, redeemable preferred stock and shareholders’ equity (deficit) | $ | 3,575,095 |  | $ | 1,810,802

See accompanying Notes to Condensed Consolidated Financial Statements
2

Table of Contents
Bright Health Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Loss)
(in thousands, except share and per share data)
(Unaudited)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Revenue: |  |  |  |  |  |  |
Premium revenue | $ | 1,020,233 |  | $ | 345,426 |  | $ | 2,922,950 |  | $ | 827,135
Service revenue | 11,079 |  | 4,920 |  | 31,602 |  | 13,344
Investment income | 47,345 |  | 1,774 |  | 112,503 |  | 7,063
Total revenue | 1,078,657 |  | 352,120 |  | 3,067,055 |  | 847,542
Operating expenses: |  |  |  |  |  |  |
Medical costs | 1,050,943 |  | 311,319 |  | 2,640,143 |  | 675,114
Operating costs | 309,790 |  | 97,379 |  | 779,090 |  | 260,650
Depreciation and amortization | 14,205 |  | 2,678 |  | 25,981 |  | 5,550
Total operating expenses | 1,374,938 |  | 411,376 |  | 3,445,214 |  | 941,314
Operating loss | (296,281) |  | (59,256) |  | (378,159) |  | (93,772)
Interest expense | 1,594 |  | — |  | 6,282 |  | —
Other income | (1,226) |  | — |  | (1,226) |  | —
Loss before income taxes | (296,649) |  | (59,256) |  | (383,215) |  | (93,772)
Income tax expense (benefit) | 73 |  | — |  | (18,225) |  | (9,162)
Net loss | (296,722) |  | (59,256) |  | (364,990) |  | (84,610)
Net earnings attributable to noncontrolling interests | (3,942) |  | — |  | (5,354) |  | —
Net loss attributable to Bright Health Group, Inc. common shareholders | $ | (300,664) |  | $ | (59,256) |  | $ | (370,344) |  | $ | (84,610)
Basic and diluted loss per share attributable to Bright Health Group, Inc. common shareholders | $ | (0.48) |  | $ | (0.43) |  | $ | (1.19) |  | $ | (0.62)
Basic and diluted weighted-average common shares outstanding | 630,378 |  | 136,337 |  | 312,294 |  | 135,926

See accompanying Notes to Condensed Consolidated Financial Statements
3

Table of Contents
Bright Health Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(Unaudited)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Net loss | $ | (296,722) |  | $ | (59,256) |  | $ | (364,990) |  | $ | (84,610)
Other comprehensive (loss) income: |  |  |  |  |  |  |
Unrealized investment holding (losses) gains arising during the year, net of tax of $0 and $0, respectively | (143) |  | (958) |  | (1,808) |  | 2,326
Less: reclassification adjustments for investment gains, net of tax of $0 and $0, respectively | 160 |  | 119 |  | 388 |  | 68
Other comprehensive (loss) income | (303) |  | (1,077) |  | (2,196) |  | 2,258
Comprehensive loss | (297,025) |  | (60,333) |  | (367,186) |  | (82,352)
Comprehensive loss attributable to noncontrolling interests | (3,942) |  | — |  | (5,354) |  | —
Comprehensive loss attributable to Bright Health Group, Inc. common shareholders | $ | (300,967) |  | $ | (60,333) |  | $ | (372,540) |  | $ | (82,352)

See accompanying Notes to Condensed Consolidated Financial Statements
4

Table of Contents
Bright Health Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Redeemable Preferred Stock and Shareholders’ Equity (Deficit)
(in thousands)
(Unaudited)

| Redeemable Preferred Stock |  |  | Common Stock |  | Additional Paid-In Capital |  | Retained Earnings (Deficit) |  | Accumulated Other Comprehensive Income (Loss) |  | Total
2021 | Shares |  | Amount |  |  | Shares |  | Amount |  |  |  |
Balance at January 1, 2021 | 164,245 |  |  | 1,681,015 |  |  |  | 137,663 |  |  | $ | 14 |  |  | $ | 9,877 |  |  | $ | (515,989) |  |  | $ | 2,426 |  |  | $ | (503,672) |
Net loss | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | (25,162) |  |  | — |  |  | (25,162) |
Issuance of preferred stock | 1,420 |  |  | 55,137 |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Issuance of common stock | — |  |  | — |  |  |  | 4,661 |  |  | — |  |  | 4,893 |  |  | — |  |  | — |  |  | 4,893 |
Share-based compensation | — |  |  | — |  |  |  | — |  |  | — |  |  | 5,176 |  |  | — |  |  | — |  |  | 5,176 |
Other comprehensive loss | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,042) |  |  | (1,042) |
Balance at March 31, 2021 | 165,665 |  |  | $ | 1,736,152 |  |  |  | 142,324 |  |  | $ | 14 |  |  | $ | 19,946 |  |  | $ | (541,151) |  |  | $ | 1,384 |  |  | $ | (519,807) |
Net loss | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | (44,518) |  |  | — |  |  | (44,518) |
Issuance of preferred stock | 2,067 |  |  | 79,807 |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Conversion of preferred stock to common stock | (167,732) |  |  | (1,815,959) |  |  |  | 427,897 |  |  | 43 |  |  | 1,815,916 |  |  | — |  |  | — |  |  | 1,815,959 |
Issuance of common stock | — |  |  | — |  |  |  | 4,120 |  |  | 1 |  |  | 4,722 |  |  | — |  |  | — |  |  | 4,723 |
Sale of common stock from IPO, net of offering costs | — |  |  | — |  |  |  | 51,350 |  |  | 5 |  |  | 880,637 |  |  | — |  |  | — |  |  | 880,642 |
Share-based compensation | — |  |  | — |  |  |  | — |  |  | — |  |  | 13,878 |  |  | — |  |  | — |  |  | 13,878 |
Other comprehensive loss | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (851) |  |  | (851) |
Balance at June 30, 2021 | — |  |  | — |  |  |  | 625,691 |  |  | $ | 63 |  |  | $ | 2,735,099 |  |  | $ | (585,669) |  |  | $ | 533 |  |  | $ | 2,150,026 |
Net loss | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | (300,664) |  |  | — |  |  | (300,664) |
Issuance of common stock | — |  |  | — |  |  |  | 4,965 |  |  | — |  |  | 75,965 |  |  | — |  |  | — |  |  | 75,965 |
Return of common stock from escrow settlement | — |  |  | — |  |  |  | (2,522) |  |  | — |  |  | (12,000) |  |  | — |  |  | — |  |  | (12,000) |
Share-based compensation | — |  |  | — |  |  |  | — |  |  | — |  |  | 24,180 |  |  | — |  |  | — |  |  | 24,180 |
Other comprehensive loss | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (303) |  |  | (303) |
Balance at September 30, 2021 | — |  |  | — |  |  |  | 628,134 |  |  | $ | 63 |  |  | $ | 2,823,244 |  |  | $ | (886,333) |  |  | $ | 230 |  |  | $ | 1,937,204 |

See accompanying Notes to Condensed Consolidated Financial Statements
5

Table of Contents
Bright Health Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Redeemable Preferred Stock and Shareholders’ Equity (Deficit)
(in thousands)
(Unaudited)

| Redeemable Preferred Stock |  |  | Common Stock |  | Additional Paid-In Capital |  | Retained Earnings (Deficit) |  | Accumulated Other Comprehensive Income (Loss) |  | Total
2020 | Shares |  | Amount |  |  | Shares |  | Amount |  |  |  |
Balance at January 1, 2020 | 119,222 |  |  | 871,990 |  |  |  | 135,509 |  |  | $ | 14 |  |  | $ | 3,184 |  |  | $ | (267,547) |  |  | $ | 982 |  |  | $ | (263,367) |
Net loss | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | (7,280) |  |  | — |  |  | (7,280) |
Issuance of preferred stock | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Issuance of common stock | — |  |  | — |  |  |  | 183 |  |  | — |  |  | 13 |  |  | — |  |  | — |  |  | 13 |
Share-based compensation | — |  |  | — |  |  |  | — |  |  | — |  |  | 943 |  |  | — |  |  | — |  |  | 943 |
Other comprehensive income (loss) | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 951 |  |  | 951 |
Balance at March 31, 2020 | 119,222 |  |  | 871,990 |  |  |  | 135,692 |  |  | $ | 14 |  |  | $ | 4,140 |  |  | $ | (274,827) |  |  | $ | 1,933 |  |  | $ | (268,740) |
Net loss | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | (18,074) |  |  | — |  |  | (18,074) |
Issuance of preferred stock | 19,661 |  |  | 291,200 |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Issuance of common stock | — |  |  | — |  |  |  | 246 |  |  | — |  |  | 118 |  |  | — |  |  | — |  |  | 118 |
Share-based compensation | — |  |  | — |  |  |  | — |  |  | — |  |  | 1,250 |  |  | — |  |  | — |  |  | 1,250 |
Other comprehensive income (loss) | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,384 |  |  | 2,384 |
Balance at June 30, 2020 | 138,883 |  |  | 1,163,190 |  |  |  | 135,938 |  |  | $ | 14 |  |  | $ | 5,508 |  |  | $ | (292,901) |  |  | $ | 4,317 |  |  | $ | (283,062) |
Net loss | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | (59,256) |  |  | — |  |  | (59,256) |
Issuance of preferred stock | 23,296 |  |  | 475,640 |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Issuance of common stock | — |  |  | — |  |  |  | 882 |  |  | — |  |  | 743 |  |  | — |  |  | — |  |  | 743 |
Share-based compensation | — |  |  | — |  |  |  | — |  |  | — |  |  | 1,529 |  |  | — |  |  | — |  |  | 1,529 |
Other comprehensive income (loss) | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,077) |  |  | (1,077) |
Balance at September 30, 2020 | 162,179 |  |  | 1,638,830 |  |  |  | 136,820 |  |  | $ | 14 |  |  | $ | 7,780 |  |  | $ | (352,157) |  |  | $ | 3,240 |  |  | $ | (341,123) |

See accompanying Notes to Condensed Consolidated Financial Statements
6

Table of Contents
Bright Health Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

| Nine Months Ended September 30,
| 2021 |  | 2020
Cash flows from operating activities: |  |  |
Net loss | $ | (370,344) |  | $ | (84,610)
Adjustments to reconcile net loss to net cash provided by operating activities: |  |  |
Depreciation and amortization | 25,981 |  | 5,550
Share-based compensation | 43,234 |  | 3,722
Deferred income taxes | (17,946) |  | —
Unrealized gain on equity securities | (109,012) |  | —
Other, net | 14,555 |  | 1,022
Changes in assets and liabilities, net of acquired assets and liabilities: |  |  |
Accounts receivable | (18,683) |  | 27,508
Other assets | (86,836) |  | (24,980)
Medical cost payable | 342,531 |  | 35,458
Risk adjustment payable | 359,257 |  | 68,186
Accounts payable and other liabilities | 53,853 |  | (22,015)
Unearned revenue | (3,476) |  | 1,498
Net cash provided by operating activities | 233,114 |  | 11,339
Cash flows from investing activities: |  |  |
Purchases of investments | (736,838) |  | (702,672)
Proceeds from sales, paydown, and maturities of investments | 536,110 |  | 349,113
Purchases of property and equipment | (20,682) |  | (1,181)
Business acquisitions, net of cash acquired | (431,718) |  | (174,090)
Net cash used in investing activities | (653,128) |  | (528,830)
Cash flows from financing activities: |  |  |
Proceeds from issuance of preferred stock | — |  | 686,840
Proceeds from issuance of common stock | 10,581 |  | 874
Proceeds from short-term borrowings | 200,000 |  | —
Repayments of short-term borrowings | (200,000) |  | —
Payments for debt issuance costs | (3,391) |  | —
Proceeds from IPO | 887,328 |  | —
Payments for IPO offering costs | (6,686) |  | —
Net cash provided by financing activities | 887,832 |  | 687,714
Net increase in cash and cash equivalents | 467,818 |  | 170,223
Cash and cash equivalents – beginning of year | 488,371 |  | 522,910
Cash and cash equivalents – end of period | $ | 956,189 |  | $ | 693,133
Supplemental disclosures of cash flow information: |  |  |
Changes in unrealized (loss) gain on available-for-sale securities in OCI | $ | (2,196) |  | $ | 2,258
Cash paid for interest | 3,865 |  | —
Supplemental schedule of non-cash activities: |  |  |
Redeemable convertible preferred stock issued for acquisitions | $ | 134,944 |  | $ | 80,000
Conversion of redeemable convertible preferred stock to common stock upon initial public offering | 1,815,916 |  | —

See accompanying Notes to Condensed Consolidated Financial Statements
7

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
Organization: Bright Health Group, Inc. and subsidiaries (collectively, “Bright Health,” “we,” “our,” “us,” or the “Company”) was founded in 2015 to transform healthcare. Our mission of Making Healthcare Right. Together. is built upon the belief that by connecting and aligning the local resources in healthcare delivery with the financing of care, we can drive a superior consumer experience, reduce systemic waste, lower costs, and optimize clinical outcomes.
Stock Split: On June 2, 2021, we effected a stock split of the Company’s common stock on a 1-for-3 basis (the “Stock Split”). In connection with the Stock Split, the conversion rate for the Company’s preferred stock was proportionately adjusted such that the common stock issuable upon conversion of such preferred stock was increased in proportion to the Stock Split. Accordingly, all common stock share and per share amounts for all periods presented in these financial statements have been retroactively adjusted to reflect this Stock Split.
Initial Public Offering: On June 28, 2021, we completed our initial public offering (“IPO”) in which we issued and sold 51,350,000 shares of common stock, par value $0.0001 per share, at an offering price of $18.00 per share. We received net proceeds of $887.3 million from the sale of our common stock, after deducting underwriting discounts and commissions of $37.0 million. We used a portion of the net proceeds from our IPO to repay in full our outstanding borrowings under our revolving credit facility, as well as to fund the acquisition of Centrum Medical Holdings, LLC (“Centrum”). Refer to Note 2, Business Combinations, and Note 7, Short-Term Borrowings for more information.
The Company’s Common Stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “BHG”.
We incurred $6.7 million of deferred offering costs consisting primarily of accounting, legal and other fees related to our IPO, which were recorded against IPO proceeds within additional paid-in capital upon closing of our IPO.
Conversion of Preferred Stock into Common Stock: On June 28, 2021, the Company issued 427,897,381 shares of common stock upon conversion (the “Conversion”) of all outstanding shares of its Series A Convertible Preferred Stock, par value $0.0001 per share, Series B Convertible Preferred Stock, par value $0.0001 per share, Series C Convertible Preferred Stock, par value $0.0001 per share, Series D Convertible Preferred Stock, par value $0.0001 per share, and Series E Convertible Preferred Stock, par value $0.0001 per share (collectively, the “Preferred Stock”), pursuant to its eighth amended and restated certificate of incorporation. Conversion of the preferred stock into shares of common stock occurred automatically immediately prior to the closing of our IPO.
Basis of Presentation: The condensed consolidated financial statements include the accounts of Bright Health Group, Inc. and all subsidiaries and controlled companies. All intercompany balances and transactions are eliminated upon consolidation. The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. We have omitted certain footnote disclosures that would substantially duplicate the disclosures in our audited consolidated financial statements, unless the information contained in those disclosures materially changed or is required by GAAP. As such, the condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2020 included in the prospectus dated June 23, 2021 (File No.333-256286) (the “Prospectus”), as filed with the United States Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended. The accompanying condensed consolidated financial statements include all normal recurring adjustments necessary for fair presentation of the interim financial statements.
Use of Estimates: The preparation of our condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Our most significant estimates include medical costs payable, risk adjustment revenue and associated payables and receivables, valuation and impairment of goodwill and other intangible assets, valuation and impairment of investments and estimates of share-based compensation. Actual results could differ from these estimate s. For the three months ended September 30, 2021, we recognized a change in estimate for risk adjustment of $134.0 million as a result of updated data inputs used to calculate Individual and Family Plan (“IFP”) members’ expected full year risk scores, which resulted in an increase in risk adjustment
8

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
payable in the Condensed Consolidated Balance Sheets and a reduction in premium revenue in the Condensed Consolidated Statements of Income (Loss).
Operating Costs: Our operating costs, by functional classification for the three and nine months ended September 30, 2021 and 2020, are as follows (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Compensation and fringe benefits | $ | 100,062 |  |  | $ | 35,588 |  |  | $ | 234,467 |  |  | $ | 92,589 |
Professional fees | 61,483 |  |  | 20,745 |  |  | 143,248 |  |  | 53,381 |
Marketing and selling expense | 69,443 |  |  | 15,941 |  |  | 183,636 |  |  | 39,056 |
Other operating expenses | 78,802 |  |  | 25,105 |  |  | 217,739 |  |  | 75,624 |
Total operating costs | $ | 309,790 |  |  | $ | 97,379 |  |  | $ | 779,090 |  |  | $ | 260,650 |

Recently Issued and Adopted Accounting Pronouncements: There were no accounting pronouncements that were recently issued and not yet adopted or adopted since our audited consolidated financial statements that had, or are expected to have, a material impact on our consolidated financial position, results of operations, or cash flows.
NOTE 2. BUSINESS COMBINATIONS
Centrum Acquisition: On July 1, 2021, we acquired 75% of the outstanding equity interests of Centrum for cash consideration of $222.4 million and $75.0 million of common stock, for total purchase consideration of $296.2 million, net of $1.2 million of cash acquired. Centrum is a value-based primary care focused, multi-specialty medical group based in Florida. Centrum operates 17 health centers in Florida, serving Commercial, Medicare, and Medicaid consumers across multiple payors, with secured expansion locations in Texas and North Carolina. Centrum is included in our NeueHealth reportable segment. Transaction costs of $1.0 million incurred in connection with the acquisition are included in operating costs in the Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2021.
The total preliminary purchase consideration for the Centrum acquisition is allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The excess of the purchase price over the net assets acquired is recorded as goodwill, which is predominantly attributable to the incremental financial benefits achievable through Bright Health Group’s integrated care delivery model, whereby Bright HealthCare members are cared for under value-based arrangements with Centrum. This model brings together the financing, distribution, and delivery of high-quality healthcare and provides the opportunity to enhance overall margin potential for the Company.
9

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table discloses the preliminary estimated fair values of assets and liabilities acquired by the Company in the Centrum acquisition (in thousands):

Accounts receivable | $ | 1,874 |
Prepaids and other current assets | 627 |
Property and equipment | 2,557 |
Intangible assets | 102,370 |
Other assets | 8,917 |
Total assets | 116,345 |
Medical payables | 19 |
Accounts payable | 359 |
Other current liabilities | 861 |
Other liabilities | 11,636 |
Total liabilities | 12,875 |
Net identified assets acquired | 103,470 |
Goodwill | 277,831 |
Redeemable noncontrolling interest | (85,075) |
Total purchase consideration | $ | 296,226 |

The preliminary fair values of acquired assets and liabilities assumed represent management’s estimate of fair value and are subject to change if additional information, such as post-close working capital adjustments, becomes available. The Company is in process of identifying any additional intangible assets that would reduce the goodwill recognized. The fair values of certain assets and liabilities have changed from previous disclosure. We obtained additional information to estimate the fair value of the right-of-use lease asset and liability included within other assets and other liabilities. We also updated the fair value of intangible assets based on the methodologies described below.
Our preliminary estimate of intangible assets related to the Centrum acquisition consists of trade names with a 15-year useful life, customer relationships with 2- to 15-year useful lives, and a reacquired contract between Bright HealthCare and Centrum with a useful life of 4.5 years. The value of the trade name was determined using the relief of royalty method and the excess earnings method was used to value the customer relationships; both methods are considered Level 3 fair value measurements. The fair value of noncontrolling interest was determined using a market approach and included a discount to account for the lack of marketability of the noncontrolling interest.
The acquisition of Centrum would not have had a material impact on our revenue or net loss had it been included in the consolidated results of the Company for the nine months ended September 30, 2021 or the three and nine months ended September 30, 2020.
Central Health Plan Acquisition: On April 1, 2021, we acquired all of the outstanding shares of Central Health Plan of California, Inc. (“CHP”) for cash consideration of $276.0 million and $79.8 million in Series E preferred stock, for total purchase consideration of $271.7 million, net of $84.1 million of cash acquired. CHP is an insurance provider of Medicare Advantage (“MA”) HMO services. CHP is included in our Bright HealthCare reportable segment. Transaction costs of $0.2 million incurred in connection with the acquisition are included in operating costs in the Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2021, out of $1.4 million of total transaction cost s we have incurred.
The total preliminary purchase consideration for the CHP acquisition is allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The excess of the purchase price over the net assets acquired is recorded as goodwill. The goodwill for CHP is attributable to synergies from leveraging CHP’s clinical model and California consumer expertise to continue to expand our MA business in the California market. The goodwill is not deductible for tax purposes.
10

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table discloses the preliminary estimated fair values of assets and liabilities acquired by the Company in the CHP acquisition (in thousands):

Accounts receivable | $ | 16,361 |
Short-term investments | 19,041 |
Prepaids and other current assets | 25,520 |
Property and equipment | 370 |
Intangible assets | 102,000 |
Total assets | 163,292 |
Medical costs payable | 79,450 |
Accounts payable | 2,371 |
Other current liabilities | 17,212 |
Other liabilities | 28,622 |
Total liabilities | 127,655 |
Net identified assets acquired | 35,637 |
Goodwill | 236,037 |
Total purchase consideration | $ | 271,674 |

The preliminary fair values of acquired assets and liabilities assumed represent management’s estimate of fair value and are subject to change if additional information, such as post-close working capital adjustments, becomes available.
Our preliminary estimate of intangible assets related to the CHP acquisition consists of customer relationships with a 10-year useful life, trade names with a 15-year useful life and the provider network with a 7-year useful life. The value of the trade name was determined using the relief from royalty method and the excess earnings method was used to value the customer relationships; both methods are considered Level 3 fair value measurements.
The following pro forma financial information presents our revenue and net loss as if CHP had been included in the consolidated results of the Company for the nine months ended September 30, 2021 and the three and nine months ended September 30, 2020 (in thousands):

| Pro Forma Consolidated Statements of Income (Loss)
| (Unaudited)
| Three Months Ended |  | Nine Months Ended September 30,
| September 30, 2020 |  | 2021 |  | 2020
Revenue | $ | 502,378 |  |  | $ | 3,195,925 |  |  | $ | 1,263,016 |
Net Loss | (49,157) |  |  | (358,935) |  |  | (70,971) |

True Health New Mexico and Zipnosis Acquisitions: On March 31, 2021 we acquired all of the outstanding equity interests of True Health New Mexico, Inc. (“THNM”) for cash consideration of $27.5 million, net of cash acquired of $24.1 million, for total purchase consideration of $3.4 million. THNM is a physician-led health insurance company offering policies available through the commercial market for individual on- and off-exchange and employer-sponsored health coverage. THNM is included in our Bright HealthCare reportable segment. In addition, on March 31, 2021, we acquired Zipnosis, Inc. (“Zipnosis”), which is a telehealth platform that offers virtual care to health systems around the U.S., for aggregate consideration of $73.0 million, including $55.1 million in Series E preferred stock and adjusted for $0.5 million of tangible net equity adjustments. We acquired $3.2 million of cash as part of the Zipnosis acquisition, for net total purchase consideration of $69.8 million. Zipnosis is included in our NeueHealth reportable segment. Transaction costs of $0.5 million incurred in connection with these acquisitions are included in operating costs in the Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2021.
11

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The total preliminary purchase consideration for the THNM and Zipnosis acquisitions is allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The excess of the purchase price over the net assets acquired is recorded as goodwill. The goodwill for THNM is attributable to synergies from leveraging THNM’s strong local clinical model of care and the ability to enter into a new state of strategic interest for future growth and expansion. The goodwill from the Zipnosis acquisition is attributable to benefits from the ability to enhance our proprietary technology platform, DocSquad, and Zipnosis’ attractive virtual care capabilities to enhance Bright Health’s consumer and provider connectivity. The goodwill from the THNM and Zipnosis acquisitions is not deductible for tax purposes.
The following table discloses the preliminary estimated fair values of assets and liabilities acquired by the Company in the THNM and Zipnosis acquisitions (in thousands):

| THNM |  | Zipnosis
Accounts receivable | $ | 714 |  |  | $ | 1,062 |
Short-term investments | 4,677 |  |  | — |
Prepaids and other current assets | 8,337 |  |  | 141 |
Property and equipment | — |  |  | 232 |
Intangible assets | 7,300 |  |  | 8,970 |
Long-term investments | 13,081 |  |  | — |
Other non-current assets | 1,324 |  |  | 766 |
Total assets | 35,433 |  |  | 11,171 |
Medical costs payable | 13,268 |  |  | — |
Accounts payable | 14,663 |  |  | 136 |
Unearned revenue | 3,645 |  |  | 120 |
Other current liabilities | 2,682 |  |  | 665 |
Other liabilities | 2,499 |  |  | 2,730 |
Total liabilities | 36,757 |  |  | 3,651 |
Net identified assets acquired | (1,324) |  |  | 7,520 |
Goodwill | 4,739 |  |  | 62,277 |
Total purchase consideration | $ | 3,415 |  |  | $ | 69,797 |

The preliminary fair values of acquired assets and liabilities assumed represent management’s estimate of fair value and are subject to change if additional information, such as post-close working capital adjustments, becomes available.
Our preliminary estimate of intangible assets related to the THNM acquisition consists of customer relationships with 10-to 14-year useful lives, trade names with a 15-year useful life and the provider network with a 7-year useful life. For the Zipnosis acquisition, our preliminary estimate of intangible assets consists of customer relationships with a 15-year useful life, trade names with a 5-year useful life and developed technology with a 7-year useful life. For these acquisitions the value of the trade names and developed technology was determined using the relief from royalty method and the excess earnings method was used to value the customer relationships; both methods are considered Level 3 fair value measurements.
12

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following pro forma financial information presents our revenue and net loss as if THNM and Zipnosis had been included in the consolidated results of the Company for the nine months ended September 30, 2021 and three and nine months ended September 30, 2020 (in thousands):

| Pro Forma Consolidated Statements of Income (Loss)
| (Unaudited)
| Three Months Ended |  | Nine Months Ended September 30,
| September 30, 2020 |  | 2021 |  | 2020
Revenue | 384,797 |  |  | $ | 3,114,954 |  |  | 943,286 |
Net Loss | (57,035) |  |  | $ | (372,315) |  |  | (85,988) |

PMA Acquisition: On December 31, 2020, we acquired a 62% controlling interest in Premier Medical Associates of Florida, LLC (“PMA”) in exchange for $74.2 million. PMA provides care services to Medicare and Medicaid patients in Florida through a network of primary care providers and population health-focused specialists. The acquisition of PMA is expected to enhance our clinical capabilities to better serve enrollees as part of our Florida market expansion. The total purchase consideration for the PMA acquisition was allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The excess of the purchase price over the net assets acquired was recorded as goodwill. The purchase price allocation is preliminary and subject to change, including the valuation of property, equipment and capitalized software and intangible assets, among other items. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date.
BND Acquisition: On April 30, 2020, we acquired all of the outstanding shares of Universal Care, Inc. (d.b.a. Brand New Day) (“BND”). BND is a leader in providing healthcare services in California and serves Medicare eligible seniors and special needs populations through their extensive network of primary care providers and specialists. BND combines analytics and evidence-based clinical programs with aligned provider relationships to provide high quality, affordable care for complex and vulnerable populations. The total consideration included $206.9 million in cash and $80.0 million in Bright Health Series D preferred stock. We have since applied indemnity escrow adjustments of $44.0 million to the acquisition price, bringing total consideration to $210.1 million, net of cash acquired of $32.8 million. Transaction costs of $3.8 million incurred in connection with the acquisition are included in operating costs in the Consolidated Statements of Income (Loss) for the year ended December 31, 2020. If BND had been included in the consolidated results of the Company for the nine months ended September 30, 2020, our pro forma revenue would have been $1.0 billion, and our pro forma net loss would have been $(100.9) million.
13

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The total purchase consideration for the BND acquisition was allocated to tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The excess of the purchase price over the net assets acquired was recorded as goodwill. The goodwill is attributable to synergies from leveraging BND’s strong clinical model of care to drive growth in our MA business outside of California. The goodwill from the BND acquisition is not deductible for tax purposes. The following table discloses the preliminary estimated fair values of assets and liabilities acquired by the Company in the BND acquisition, as well as measurement adjustments made in the nine months ended September 30, 2021 to the amounts initially recorded in 2020 (in thousands):

| Amount Recognized as of Acquisition Date (as previously reported) |  | Measurement Period Adjustments |  | Amounts Recognized as of Acquisition Date (as adjusted)
Accounts receivable | $ | 74,128 |  |  | $ | — |  |  | $ | 74,128 |
Prepaid and other currents assets | 30,583 |  |  | — |  |  | 30,583 |
Property and equipment | 4,375 |  |  | — |  |  | 4,375 |
Intangible assets | 72,600 |  |  | 1,900 |  |  | 74,500 |
Other non-current assets | 2,906 |  |  | — |  |  | 2,906 |
Total assets | 184,592 |  |  | 1,900 |  |  | 186,492 |
Medical costs payable | 119,408 |  |  | — |  |  | 119,408 |
Other current liabilities | 51,744 |  |  | 174 |  |  | 51,918 |
Other liabilities | 1,236 |  |  | 108 |  |  | 1,344 |
Total liabilities | 172,388 |  |  | 282 |  |  | 172,670 |
Net identified assets acquired | 12,204 |  |  | 1,618 |  |  | 13,822 |
Goodwill | 197,886 |  |  | (1,618) |  |  | 196,268 |
Total purchase consideration | $ | 210,090 |  |  | $ | — |  |  | $ | 210,090 |

The measurement period adjustments above primarily resulted from completing valuations for certain intangible assets. The related impact to net earnings that would have been recognized in previous periods if the adjustments were recognized as of the acquisition date is immaterial to the consolidated financial statements. We recognized intangible assets related to the BND acquisition, which consist of $25.6 million for the BND trade name with an estimated useful life of 15 years, customer relationships valued at $46.9 million with a 12-year useful life, and $2.0 million of other intangibles related to the provider network with a 10-year useful life. The value of the trade name was determined using the relief from royalty method and the excess earnings method was used to value the customer relationships; both methods are considered Level 3 fair value measurements.
14

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 3. INVESTMENTS
Fixed Maturity Securities
Available-for-sale securities are reported at fair value as of September 30, 2021 and December 31, 2020. Held-to-maturity securities are reported at amortized cost as of September 30, 2021 and December 31, 2020. The following is a summary of our investment securities as of September 30, 2021 and December 31, 2020 (in thousands):

| September 30, 2021
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Carrying Value
Cash equivalents | $ | 271,984 |  |  | $ | 1 |  |  | $ | (1) |  |  | $ | 271,984 |
Available for sale: |  |  |  |  |  |  |
U.S. government and agency obligations | 501,343 |  |  | 283 |  |  | (376) |  |  | 501,250 |
Corporate obligations | 290,917 |  |  | 384 |  |  | (106) |  |  | 291,195 |
State and municipal obligations | 15,437 |  |  | 51 |  |  | (3) |  |  | 15,485 |
Commercial paper | 5,160 |  |  | 5 |  |  | — |  |  | 5,165 |
Certificates of deposit | 26,809 |  |  | — |  |  | — |  |  | 26,809 |
Mortgage-backed securities | 2,533 |  |  | — |  |  | — |  |  | 2,533 |
Other | 12,876 |  |  | 1 |  |  | (8) |  |  | 12,869 |
Total available-for-sale securities | 855,075 |  |  | 724 |  |  | (493) |  |  | 855,306 |
Held to maturity: |  |  |  |  |  |  |
U.S. government and agency obligations | 7,745 |  |  | — |  |  | — |  |  | 7,745 |
Certificates of deposit | 1,447 |  |  | — |  |  | — |  |  | 1,447 |
Total held-to-maturity securities | 9,192 |  |  | — |  |  | — |  |  | 9,192 |
Total investments | $ | 1,136,251 |  |  | $ | 725 |  |  | $ | (494) |  |  | $ | 1,136,482 |

| December 31, 2020
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Carrying Value
Cash equivalents | $ | 153,743 |  |  | $ | — |  |  | $ | (3) |  |  | $ | 153,740 |
Available for sale: |  |  |  |  |  |  |
U.S. government and agency obligations | 291,834 |  |  | 1,246 |  |  | (1) |  |  | 293,079 |
Corporate obligations | 280,557 |  |  | 1,104 |  |  | (30) |  |  | 281,631 |
State and municipal obligations | 18,459 |  |  | 107 |  |  | — |  |  | 18,566 |
Commercial paper | 14,990 |  |  | 1 |  |  | — |  |  | 14,991 |
Certificates of deposit | 53,504 |  |  | 2 |  |  | (1) |  |  | 53,505 |
Other | 5,534 |  |  | 2 |  |  | — |  |  | 5,536 |
Total available-for-sale securities | 664,878 |  |  | 2,462 |  |  | (32) |  |  | 667,308 |
Held to maturity: |  |  |  |  |  |  |
U.S. government and agency obligations | 6,677 |  |  | — |  |  | — |  |  | 6,677 |
Certificates of deposit | 1,119 |  |  | — |  |  | — |  |  | 1,119 |
Total held-to-maturity securities | 7,796 |  |  | — |  |  | — |  |  | 7,796 |
Total investments | $ | 826,417 |  |  | $ | 2,462 |  |  | $ | (35) |  |  | $ | 828,844 |

15

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The fair value of available-for-sale investments, including those that are cash equivalents, with gross unrealized losses by major security type and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2021 and December 31, 2020 were as follows (in thousands):

| September 30, 2021
| Less Than 12 Months |  | 12 Months or Greater |  | Total
Description of Investments | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Cash equivalents | $ | 9,643 |  |  | $ | (1) |  |  | $ | — |  |  | $ | — |  |  | $ | 9,643 |  |  | $ | (1) |
U.S. government and agency obligations | 347,735 |  |  | (376) |  |  | — |  |  | — |  |  | 347,735 |  |  | (376) |
Corporate obligations | 137,456 |  |  | (106) |  |  | — |  |  | — |  |  | 137,456 |  |  | (106) |
State and municipal obligations | 2,812 |  |  | (3) |  |  | — |  |  | — |  |  | 2,812 |  |  | (3) |
Other | 10,950 |  |  | (8) |  |  | — |  |  | — |  |  | 10,950 |  |  | (8) |
Total bonds | $ | 508,596 |  |  | $ | (494) |  |  | $ | — |  |  | $ | — |  |  | $ | 508,596 |  |  | $ | (494) |

| December 31, 2020
| Less Than 12 Months |  | 12 Months or Greater |  | Total
Description of Investments | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
Cash equivalents | $ | 25,007 |  |  | $ | (3) |  |  | $ | — |  |  | $ | — |  |  | $ | 25,007 |  |  | $ | (3) |
U.S. government and agency obligations | 12,507 |  |  | (1) |  |  | — |  |  | — |  |  | 12,507 |  |  | (1) |
Corporate obligations | 121,006 |  |  | (30) |  |  | — |  |  | — |  |  | 121,006 |  |  | (30) |
Commercial paper | 999 |  |  | — |  |  | — |  |  | — |  |  | 999 |  |  | — |
Certificates of deposit | 14,003 |  |  | (1) |  |  | — |  |  | — |  |  | 14,003 |  |  | (1) |
Total bonds | $ | 173,522 |  |  | $ | (35) |  |  | $ | — |  |  | $ | — |  |  | $ | 173,522 |  |  | $ | (35) |

As of September 30, 2021, we had 744 investment positions out of 1,859 that were in an unrealized loss position. As of December 31, 2020, we had 117 investment positions out of 1,917 that were in an unrealized loss position. We believe that we will collect the principal and interest due on our debt securities that have an amortized cost in excess of fair value. The unrealized losses were primarily caused by interest rate increases and not by unfavorable changes in the credit quality associated with these securities. At each reporting period, we evaluate securities for impairment when the fair value of the investment is less than its amortized cost. We evaluated the underlying credit quality and credit ratings of the issuers, noting no significant deterioration since purchase. As of September 30, 2021, we did not have the intent to sell any of the securities in an unrealized loss position. Therefore, we believe these losses to be temporary.
As of September 30, 2021, the maturity of available-for-sale securities, by contractual maturity, reflected at amortized cost and fair value were as follows (in thousands):

| Amortized Cost |  | Fair Value
Due in one year or less | $ | 203,284 |  |  | $ | 203,614 |
Due after one year through five years | 651,705 |  |  | 651,606 |
Due after five years through 10 years | 86 |  |  | 86 |
Due after 10 years | — |  |  | — |
Total debt securities | $ | 855,075 |  |  | $ | 855,306 |

16

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Investment income in the Condensed Consolidated Statements of Income (Loss) for the nine months ended September 30, 2021 and 2020, was $3.5 million, and $7.1 million, respectively, related to our fixed maturity securities. Realized gains (losses) from our fixed maturity securities of $0.4 million and $0.1 million are included within total investment income, and reclassified out of accumulated other comprehensive income, for the nine months ended September 30, 2021 and 2020, respectively.
Equity Securities
On April 1, 2021 we completed the purchase of 1.6 million shares of equity securities for aggregate cash consideration of $40.1 million. As of September 30, 2021, the equity securities had a carrying value of $149.1 million, which is included in short-term investments in the Condensed Consolidated Balance Sheet. We recognized an unrealized gain of $46.3 million and $109.0 million in investment income in the Condensed Consolidated Statements of Income (Loss) for the three and nine months ended September 30, 2021, respectively.
NOTE 4. FAIR VALUE MEASUREMENTS
Basis of fair value measurement:
Level 1:
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2:
Quoted prices for similar assets or liabilities in active markets or quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3:
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
Certain assets and liabilities are measured at fair value in the condensed consolidated financial statements or have fair values disclosed in the notes to the condensed consolidated financial statements. These assets and liabilities are classified into one of three levels of a hierarchy defined by GAAP.
For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, except for the equity securiti es, see note 5 of notes to the audited consolidated financial statements included in our Prospectus filed with the SEC.
Equity Securities — The fair value of the equity securities was determined based on the quoted market price of the underlying securities in an active market.
17

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following tables set forth our fair value measurements as of September 30, 2021 and December 31, 2020, for assets measured at fair value on a recurring basis (in thousands):

| September 30, 2021
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets |  |  |  |  |  |  |
Cash equivalents | $ | 209,727 |  |  | $ | 35,507 |  |  | $ | — |  |  | $ | 245,234 |
Fixed maturity securities, available for sale: |  |  |  |  |  |  |
U.S. government and agency obligations | 358,202 |  |  | 143,048 |  |  | — |  |  | 501,250 |
Corporate obligations | 2,234 |  |  | 288,961 |  |  | — |  |  | 291,195 |
State and municipal obligations | — |  |  | 15,485 |  |  | — |  |  | 15,485 |
Commercial paper | — |  |  | 5,165 |  |  | — |  |  | 5,165 |
Certificates of deposit | 18,738 |  |  | 8,071 |  |  | — |  |  | 26,809 |
Mortgage-backed securities | 2,533 |  |  | — |  |  | — |  |  | 2,533 |
Other | — |  |  | 12,869 |  |  | — |  |  | 12,869 |
Total fixed maturity securities, available for sale: | 381,707 |  |  | 473,599 |  |  | — |  |  | 855,306 |
Equity securities | 149,144 |  |  | — |  |  | — |  |  | 149,144 |
Total assets at fair value | $ | 740,578 |  |  | $ | 509,106 |  |  | $ | — |  |  | $ | 1,249,684 |
Liabilities |  |  |  |  |  |  |
Contingent consideration | $ | — |  |  | $ | — |  |  | $ | 7,079 |  |  | $ | 7,079 |

| December 31, 2020
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets |  |  |  |  |  |  |
Cash equivalents | $ | 149,499 |  |  | $ | 4,019 |  |  | $ | — |  |  | $ | 153,518 |
Fixed maturity securities, available for sale: |  |  |  |  |  |  |
U.S. government and agency obligations | 197,886 |  |  | 95,193 |  |  | — |  |  | 293,079 |
Corporate obligations | — |  |  | 281,631 |  |  | — |  |  | 281,631 |
State and municipal obligations | — |  |  | 18,566 |  |  | — |  |  | 18,566 |
Commercial paper | — |  |  | 14,991 |  |  | — |  |  | 14,991 |
Certificates of deposit | — |  |  | 53,505 |  |  | — |  |  | 53,505 |
Other | — |  |  | 5,536 |  |  | — |  |  | 5,536 |
Total assets at fair value | $ | 347,385 |  |  | $ | 473,441 |  |  | $ | — |  |  | $ | 820,826 |
Liabilities |  |  |  |  |  |  |
Contingent consideration | $ | — |  |  | $ | — |  |  | $ | 5,716 |  |  | $ | 5,716 |

The following tables set forth the Company’s fair value measurements as of September 30, 2021 and December 31, 2020, for certain financial instruments not measured at fair value on a recurring basis (in thousands):

| September 30, 2021
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash equivalents, held to maturity | $ | 26,750 |  |  | $ | — |  |  | $ | — |  |  | $ | 26,750 |
Fixed maturity securities, held to maturity: |  |  |  |  |  |  |
U.S. government and agency obligations | 7,768 |  |  | — |  |  | — |  |  | 7,768 |
Certificates of deposit | 1,447 |  |  | — |  |  | — |  |  | 1,447 |
Total held to maturity | $ | 35,965 |  |  | $ | — |  |  | $ | — |  |  | $ | 35,965 |

18

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

| December 31, 2020
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash equivalents, held to maturity | $ | 222 |  |  | $ | — |  |  | $ | — |  |  | $ | 222 |
Fixed maturity securities, held to maturity: |  |  |  |  |  |  |
U.S. government and agency obligations | 6,732 |  |  | — |  |  | — |  |  | 6,732 |
Certificates of deposit | — |  |  | 1,119 |  |  | — |  |  | 1,119 |
Total held to maturity | $ | 6,954 |  |  | $ | 1,119 |  |  | $ | — |  |  | $ | 8,073 |

There have been no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy. The contingent consideration liability related to the acquisition of AssociatesMD Medical Group, Inc. is measured using Level 3 inputs based on a formulaic multiple of forecasted 2023 EBITDA per the terms of the purchase agreement discounted back to net present value. The following table presents the changes in fair value of the contingent consideration liability for the nine months ended September 30, 2021 and year ended December 31, 2020 (in thousands):

| 2021 |  | 2020
Balance at beginning of period | $ | 5,716 |  |  | $ | 5,716 |
Change in fair value of contingent consideration | 1,363 |  |  | — |
Balance at end of period | $ | 7,079 |  |  | $ | 5,716 |

The carrying amounts reported on the Condensed Consolidated Balance Sheets for other current financial assets and liabilities approximate fair value due to their short-term nature. These assets and liabilities are not included in the tables above.
NOTE 5. GOODWILL AND INTANGIBLE ASSETS
Changes in the carrying value of goodwill by reportable segment were as follows (in thousands):

| Bright HealthCare |  | NeueHealth
| Gross Carrying Amount |  | Cumulative Impairment |  | Gross Carrying Amount |  | Cumulative Impairment
Balance at December 31, 2020 | $ | 197,886 |  |  | $ | — |  |  | $ | 65,149 |  |  | $ | — |
Acquisitions | 240,776 |  |  |  |  | 340,108 |  |  |
Purchase adjustments | (1,618) |  |  | — |  |  | — |  |  | — |
Balance at September 30, 2021 | $ | 437,044 |  |  | $ | — |  |  | $ | 405,257 |  |  | $ | — |

The gross carrying value and accumulated amortization for definite-lived intangible assets were as follows (in thousands):

| September 30, 2021 |  | December 31, 2020
| Gross Carrying Amount |  | Accumulated Amortization |  | Gross Carrying Amount |  | Accumulated Amortization
Customer relationships | $ | 209,321 |  |  | $ | 19,257 |  |  | $ | 117,451 |  |  | $ | 3,664 |
Trade names | 99,231 |  |  | 5,057 |  |  | 38,161 |  |  | 1,604 |
Reacquired contract | 59,000 |  |  | 3,278 |  |  | — |  |  | — |
Developed technology | 6,200 |  |  | 443 |  |  | — |  |  | — |
Other | 6,400 |  |  | 598 |  |  | 2,000 |  |  | 133 |
Total | $ | 380,152 |  |  | $ | 28,633 |  |  | $ | 157,612 |  |  | $ | 5,401 |

19

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The acquisition date fair values and weighted-average useful lives assigned to definite-lived intangible assets acquired during the nine months ended September 30, 2021 were as follows (in thousands):

| Fair Value |  | Weighted-Average Useful Life (in years)
Customer relationships | $ | 90,670 |  |  | 16.0
Trade names | 60,370 |  |  | 14.9
Reacquired contract | 59,000 |  |  | 4.5
Developed technology | 6,200 |  |  | 7.0
Other | 4,400 |  |  | 7.0
Total | $ | 220,640 |  |  | 9.8

Amortization expense relating to intangible assets for the three months ended September 30, 2021 and 2020 was $13.3 million and $1.8 million, respectively, and amortization expense for the nine months ended September 30, 2021 and 2020 was $23.2 million and $3.6 million, respectively. Estimated amortization expense relating to intangible assets for the remainder of 2021 and for each of the next five full years ending December 31 is as follows (in thousands):

2021 (October-December) | $ | 10,513 |
2022 | 42,050 |
2023 | 42,029 |
2024 | 41,890 |
2025 | 41,890 |
2026 | 26,323 |

NOTE 6. MEDICAL COSTS PAYABLE
The following table shows the components of the change in medical costs payable for the nine months ended September 30 (in thousands):

| 2021 |  | 2020
Medical costs payable - January 1 | $ | 249,777 |  |  | $ | 44,804 |
Incurred related to: |  |  |
Current year | 2,647,719 |  |  | 685,637 |
Prior year | 1,726 |  |  | (9,297) |
Total incurred | 2,649,445 |  |  | 676,340 |
Paid related to: |  |  |
Current year | 2,074,602 |  |  | 610,161 |
Prior year | 232,312 |  |  | 29,974 |
Total paid | 2,306,914 |  |  | 640,135 |
Acquired claims liabilities | 92,737 |  |  | 118,662 |
Medical costs payable - September 30 | $ | 685,045 |  |  | $ | 199,671 |

Medical costs payable attributable to prior years increased by $1.7 million and decreased by $9.3 million for the nine months ended September 30, 2021 and 2020, respectively. Medical costs payable estimates are adjusted as additional information becomes known regarding claims; there were no significant changes to estimation methodologies during the periods.
20

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The table below details the components making up the medical costs payable as of September 30 (in thousands):

| 2021 |  | 2020
Claims unpaid | $ | 42,488 |  |  | $ | 25,961 |
Provider incentive payable | 69,274 |  |  | 10,391 |
Claims adjustment expense liability | 12,413 |  |  | 2,572 |
Incurred but not reported | 560,870 |  |  | 160,747 |
Total medical costs payable | $ | 685,045 |  |  | $ | 199,671 |

Medical costs payable are primarily related to the current year. The Company has recorded claims adjustment expense as a component of operating costs in the Condensed Consolidated Statements of Income (Loss).
NOTE 7. SHORT-TERM BORROWINGS
On March 1, 2021, we entered into a $350.0 million revolving credit agreement with a syndicate of banks (the “Credit Agreement”). On August 2, 2021, the Credit Agreement was amended to change the definition of “Qualified IPO” by reducing the net proceeds required to be received by the Company from $1.0 billion to $850.0 million. In addition, prior to such amendment, the Credit Agreement contained a covenant that required the Company to maintain a total debt to capitalization ratio of (a) 0.25 to 1.00 prior to a Qualified IPO, and (b) 0.30 to 1.00 after a Qualified IPO. The Amendment changed this covenant by removing the increase in the ratio after a Qualified IPO such that the Company is now required to maintain a total debt to capitalization ratio of 0.25 to 1.00. On August 4, 2021, we elected to extend the maturity date of the Credit Agreement from February 28, 2022 to February 28, 2024. During the second quarter of 2021, we utilized a portion of the net IPO proceeds to repay the $200.0 million principal balance of indebtedness outstanding under our revolving credit agreement originally entered into on March 1, 2021 and the associated interest and other costs of $3.2 million. As of September 30, 2021, we have no borrowings outstanding under the Credit Agreement.
NOTE 8. SHARE-BASED COMPENSATION
2016 Incentive Plan
The Company adopted its 2016 Stock Incentive Plan (the “2016 Incentive Plan”) in March 2016. The 2016 Incentive Plan allowed for the Company to grant stock options, restricted stock awards (“RSAs”), and restricted stock units (“RSUs”) to certain employees, consultants and non-employee directors. The 2016 Incentive Plan was initially adopted on March 25, 2016, and most recently amended in December 2020. Following the effectiveness of our 2021 Omnibus Plan (the “2021 Incentive Plan”), no further awards will be granted under the 2016 Incentive Plan. However, all outstanding awards granted under the 2016 Incentive Plan will continue to be governed by the existing terms of the 2016 Incentive Plan and the applicable award agreements.
2021 Incentive Plan
The 2021 Incentive Plan was adopted by our Board of Directors on May 21, 2021 and approved by our stockholders on May 25, 2021 and June 5, 2021. The 2021 Incentive Plan allows the Company to grant stock options, RSAs, RSUs, stock appreciation rights, other equity based awards, and cash based incentive awards to certain employees, consultants and non-employee directors. There are 42.0 million shares of common stock authorized for issuance under the 2021 Incentive Plan. As of September 30, 2021, a total of 26.8 million shares of common stock were available for future issuance under the 2021 Incentive Plan.
Share-Based Compensation Expense
We recognized share-based compensation expense of $43.2 million and $3.7 million for the nine months ended September 30, 2021 and 2020, respectively, which is included in operating costs in the Condensed Consolidated Statements of Income (Loss).
21

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Stock Options
The Board of Directors or the Compensation Committee of the Board of Directors determines the exercise price, vesting periods and expiration date at the time of the grant. Stock options granted prior to the third quarter of 2021 generally vest 25% at one year from the grant date, then ratably over the next 36 months with continuous employee service. Stock options granted after the beginning of the third quarter of 2021 generally vest ratably over three years. Option grants generally expire 10 years from the date of grant.
The calculated value of each option award is estimated on the date of grant using a Black-Scholes option valuation model that used the following weighted-average assumptions for options granted during the nine months ended September 30, 2021:

| 2021
Risk-free interest rate | 0.8 | %
Expected volatility | 33.3 | %
Expected dividend rate | 0.0 | %
Forfeiture rate | 14.5 | %
Expected life in years | 6.1

Risk-free interest rates are based on U.S. Treasury yields in effect at the time of grant. Expected volatilities are based on the historical volatility of our publicly traded industry peers. We use historical data to estimate option forfeitures within the valuation model. The expected lives of options granted represent the period of time that the awards granted are expected to be outstanding based on historical exercise patterns.
The activity for the stock options for the nine months ended September 30, 2021 is as follows (in thousands, except exercise price and contractual life):

| Shares |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Life (In Years) |  | Aggregate Intrinsic Value
Outstanding at January 1, 2021 | 63,925 |  |  | $ | 1.47 |  |  | 8.7 |  | $ | 53,573 |
Granted | 20,447 |  |  | 2.58 |  |  |  |  |
Exercised | (9,373) |  |  | 1.09 |  |  |  |  |
Forfeited | (4,709) |  |  | 1.75 |  |  |  |  |
Expired | (11) |  |  | 1.09 |  |  |  |  |
Outstanding at September 30, 2021 | 70,279 |  |  | $ | 1.83 |  |  | 8.5 |  | $ | 445,246 |

The weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2021 was $10.86 per share. At September 30, 2021, there was $150.7 million of unrecognized compensation expense related to stock options that is expected to be recognized over a weighted-average period of 3.4 years.
22

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Restricted Stock Units
RSUs represent the right to receive shares of our common stock at a specified date in the future and generally vest over a three-year period. The fair value of RSUs is determined based on the closing market price of our common stock on the date of grant.
The following table summarizes RSU award activity for the nine months ended September 30, 2021 (in thousands, except weighted average grant date fair value):

| RSU
| Number of RSUs |  | Weighted Average Grant Date Fair Value
Unvested RSUs at December 31, 2020 | — |  | $ | — |
RSUs granted | 364 |  |  | 9.11 |
RSUs canceled | (19) |  |  | 9.01 |
Unvested RSUs at September 30, 2021 | 345 |  |  | $ | 9.11 |

We recognized share-based compensation expense related to RSUs of $0.2 million for the three and nine months ended September 30, 2021, which is included in operating costs in the Condensed Consolidated Statements of Income (Loss). As of September 30, 2021, there was $2.5 million of unrecognized compensation expense related to the RSU grants, which is expected to be recognized over a weighted-average period of 2.7 years.
Performance-based Restricted Stock Units (“PSUs”)
In connection with our IPO, our Board of Directors approved the grant of PSUs to members of our executive leadership team. The grant encompasses a total of 14.7 million PSUs, separated into four equal tranches, each of which are eligible to vest based on the achievement of predetermined stock price goals and a minimum service period of 3 years. This grant is intended to retain and incentivize our executive leadership to lead the Company to sustained, long-term financial and operational performance. The fair value of the PSUs is determined using a Monte-Carlo simulation.
The following table summarizes PSU award activity for the nine months ended September 30, 2021 (in thousands, except weighted average grant date fair value):

| PSU
| Number of PSUs |  | Weighted Average Grant Date Fair Value
Unvested PSUs at December 31, 2020 | — |  | $ | — |
PSUs granted | 14,700 |  |  | 9.30 |
PSUs canceled | — |  |  | — |
Unvested PSUs at September 30, 2021 | 14,700 |  |  | $ | 9.30 |

We recognized share-based compensation expense related to the PSU grant of $10.0 million and $10.3 million for the three and nine months ended September 30, 2021, respectively, which is included in operating costs in the Condensed Consolidated Statements of Income (Loss). At September 30, 2021, there was $108.5 million of unrecognized compensation expense related to the PSU grant, which is expected to be recognized over a weighted-average period of 2.7 years.
23

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 9. NET LOSS PER SHARE
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the three and nine months ended September 30 (in thousands, except for per share amounts):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Net loss attributable to Bright Health Group, Inc. common shareholders | $ | (300,664) |  |  | $ | (59,256) |  |  | $ | (370,344) |  |  | $ | (84,610) |
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted | 630,378 |  |  | 136,337 |  |  | 312,294 |  |  | 135,926 |
Net loss per share attributable to common stockholders, basic and diluted | $ | (0.48) |  |  | $ | (0.43) |  |  | $ | (1.19) |  |  | $ | (0.62) |

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share because including them would have had an anti-dilutive effect for the nine months ended September 30 (in thousands):

| Nine Months Ended September 30,
| 2021 |  | 2020
Redeemable convertible preferred stock (as converted to common stock) | — |  |  | 411,238 |
Stock options to purchase common stock | 70,279 |  |  | 58,224 |
Total | 70,279 |  |  | 469,462 |

NOTE 10. COMMITMENTS AND CONTINGENCIES
Legal proceedings: In the normal course of business, we could be involved in various legal proceedings such as, but not limited to, the following: lawsuits alleging negligence in care or general liability, violation of regulatory bodies’ rules and regulations, or violation of federal and/or state laws. At September 30, 2021 and December 31, 2020, there were no material known contingent liabilities.
24

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 11. SEGMENTS AND GEOGRAPHIC INFORMATION
Our two reportable segments are Bright HealthCare and NeueHealth.
The following tables present the reportable segment financial information for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended September 30, 2021 |  | Bright HealthCare |  | NeueHealth |  | Eliminations |  | Consolidated
Premium revenue |  | $ | 994,586 |  |  | $ | 25,647 |  |  | $ | — |  |  | $ | 1,020,233 |
Service revenue |  | (61) |  |  | 11,140 |  |  | — |  |  | 11,079 |
Investment income |  | 1,087 |  |  | 46,258 |  |  | — |  |  | 47,345 |
Total unaffiliated revenue |  | 995,612 |  |  | 83,045 |  |  | — |  |  | 1,078,657 |
Affiliated revenue |  | — |  |  | 139,759 |  |  | (139,759) |  |  | — |
Total segment revenue |  | 995,612 |  |  | 222,804 |  |  | (139,759) |  |  | 1,078,657 |
Operating income (loss) |  | (303,271) |  |  | 6,990 |  |  | — |  |  | (296,281) |
Depreciation and amortization |  | $ | 4,584 |  |  | $ | 9,621 |  |  | $ | — |  |  | $ | 14,205 |

Three Months Ended September 30, 2020 |  | Bright HealthCare |  | NeueHealth |  | Eliminations |  | Consolidated
Premium revenue |  | $ | 343,472 |  |  | $ | 1,954 |  |  | $ | — |  |  | $ | 345,426 |
Service revenue |  | — |  |  | 4,920 |  |  | — |  |  | 4,920 |
Investment income |  | 1,774 |  |  | — |  |  | — |  |  | 1,774 |
Total unaffiliated revenue |  | 345,246 |  |  | 6,874 |  |  | — |  |  | 352,120 |
Affiliated revenue |  | — |  |  | 2,727 |  |  | (2,727) |  |  | — |
Total segment revenue |  | 345,246 |  |  | 9,601 |  |  | (2,727) |  |  | 352,120 |
Operating income (loss) |  | (57,263) |  |  | (1,993) |  |  | — |  |  | (59,256) |
Depreciation and amortization |  | $ | 2,274 |  |  | $ | 404 |  |  | $ | — |  |  | $ | 2,678 |

Nine Months Ended September 30, 2021 |  | Bright HealthCare |  | NeueHealth |  | Eliminations |  | Consolidated
Premium revenue |  | $ | 2,860,270 |  |  | $ | 62,680 |  |  | $ | — |  |  | $ | 2,922,950 |
Service revenue |  | 29 |  |  | 31,573 |  |  | — |  |  | 31,602 |
Investment income |  | 3,491 |  |  | 109,012 |  |  | — |  |  | 112,503 |
Total unaffiliated revenue |  | 2,863,790 |  |  | 203,265 |  |  | — |  |  | 3,067,055 |
Affiliated revenue |  | — |  |  | 182,392 |  |  | (182,392) |  |  | — |
Total segment revenue |  | 2,863,790 |  |  | 385,657 |  |  | (182,392) |  |  | 3,067,055 |
Operating income (loss) |  | (443,450) |  |  | 65,291 |  |  | — |  |  | (378,159) |
Depreciation and amortization |  | $ | 11,524 |  |  | $ | 14,457 |  |  | $ | — |  |  | $ | 25,981 |

25

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Nine Months Ended September 30, 2020 |  | Bright HealthCare |  | NeueHealth |  | Eliminations |  | Consolidated
Premium revenue |  | $ | 821,185 |  |  | $ | 5,950 |  |  | $ | — |  |  | $ | 827,135 |
Service revenue |  | — |  |  | 13,344 |  |  | — |  |  | 13,344 |
Investment income |  | 7,063 |  |  | — |  |  | — |  |  | 7,063 |
Total unaffiliated revenue |  | 828,248 |  |  | 19,294 |  |  | — |  |  | 847,542 |
Affiliated revenue |  | — |  |  | 8,176 |  |  | (8,176) |  |  | — |
Total segment revenue |  | 828,248 |  |  | 27,470 |  |  | (8,176) |  |  | 847,542 |
Operating income (loss) |  | (88,427) |  |  | (5,345) |  |  | — |  |  | (93,772) |
Depreciation and amortization |  | $ | 4,131 |  |  | $ | 1,419 |  |  | $ | — |  |  | $ | 5,550 |

For all periods presented, all of our long-lived assets were located in the United States, and all revenues were earned in the United States. We do not include asset information by reportable segment in the reporting provided to the chief operating decision maker.
NOTE 12. INCOME TAXES
Income tax expense (benefit) was an expense of $0.1 million and a benefit of $18.2 million for the three and nine months ended September 30, 2021, respectively. The impact from income taxes varies from the federal statutory rate of 21.0% due to changes in the valuation allowance for deferred tax assets and adjustments for permanent differences. For the three months ended September 30, 2021, the expense largely relates to amortization of originating goodwill from asset acquisitions. For the nine months ended September 30, 2021, the overall tax benefit is primarily due to the release of valuation allowance in connection with new deferred tax liabilities recorded on identifiable intangibles as part of business combination accounting for the BND, Zipnosis, THNM, and CHP stock acquisitions. The Centrum acquisition was treated as an asset acquisition, and accordingly, no deferred tax assets or liabilities were recorded as part of business-combination accounting.
We assess whether sufficient future taxable income will be generated to permit the use of deferred tax assets. This assessment includes consideration of the cumulative losses incurred over the three-year period ended September 30, 2021. Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections for future earnings. On the basis of this evaluation, we have recorded a valuation allowance for deferred tax assets to the extent that they cannot be supported by reversals of existing cumulative temporary differences. Any federal tax benefit generated from losses in 2021 is expected to require an offsetting adjustment to the valuation allowance for deferred tax assets, and thus have no net effect on the income tax provision.
NOTE 13. REDEEMABLE NONCONTROLLING INTEREST
As part of the Centrum acquisition on July 1, 2021, we entered into put/call agreements with respect to the equity interests in Centrum held by the controlling interest holder. The call options allow for the Company to purchase the 25% noncontrolling interest equity over time beginning on September 30, 2022, or under certain other accelerating events as defined in the agreement, solely at the Company’s discretion. The put options allow the noncontrolling interest holder the ability to cause the Company to purchase their noncontrolling equity interest on consistent terms with the call options.
Based on the nature of the put option’s redemption features, which are outside the control of the Company, the noncontrolling interests are classified as redeemable in the accompanying Condensed Consolidated Balance Sheets at September 30, 2021. The put option redemption feature that is outside the control of the Company is settled based on EBITDA, which is an other than
26

Table of Contents
Bright Health Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
fair value settlement amount. As such, we will make a measurement adjustment when the put option redemption price exceeds the carrying amount as calculated under ASC 810, Consolidation.
There was no redeemable noncontrolling interest during the three and nine months ended September 30, 2020. The following table provides details of our redeemable noncontrolling interest activity for the three and nine months e nded September 30, 2021 (in thousands):

| Redeemable Noncontrolling Interest
Balance at January 1, 2021 | $ | 39,600 |
Earnings attributable to noncontrolling interest | 288 |
Measurement adjustment | 329 |
Balance at March 31, 2021 | $ | 40,217 |
Earnings attributable to noncontrolling interest | 640 |
Measurement adjustment | 155 |
Balance at June 30, 2021 | $ | 41,012 |
Acquisition | 85,075 |
Loss attributable to noncontrolling interest | (4,577) |
Measurement adjustment | 8,519 |
Balance at September 30, 2021 | $ | 130,029 |

27

Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. This discussion should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes and the “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q and Bright Health Group, Inc.’s audited consolidated financial statements and the accompanying notes as well as the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Bright Health Group, Inc.’s Prospectus dated June 23, 2021 (File No. 333-256286), as filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Prospectus”). Unless the context otherwise indicates or requires, the terms “we”, “our”, and the “Company” as used herein refer to Bright Health Group, Inc. and its consolidated subsidiaries.
Business Overview
Bright Health Group was founded in 2015 to transform healthcare. Our mission of Making Healthcare Right. Together. is built upon the belief that by connecting and aligning the best local resources in healthcare delivery with the financing of care, we can drive a superior consumer experience, reduce systemic waste, lower costs, and optimize clinical outcomes. We believe that for too long, U.S. healthcare, primarily designed to cater to employers and large institutions, has failed the consumer through unnecessary complexity, a lack of transparency, and rising costs. We are making healthcare simple, personal, and affordable.
To execute on our mission, we have developed a model for healthcare transformation built upon the delivery, financing, and optimization of care. By bringing these three core pillars together, we aim to build the national, integrated healthcare system of the future, designed to break down historical barriers and create an environment in which all stakeholders — from the consumer, to the provider, to the payor — can win.
Bright Health Group consists of two reportable segments: NeueHealth and Bright HealthCare:
NeueHealth is critical to our differentiated, aligned model of care. While Bright HealthCare is currently a larger contributor to revenue, due in part to the significant health plan premium revenue contribution from our consumers, we believe NeueHealth has a disproportional impact on our enterprise today and anticipate it will become increasingly important to our business and prospects, contributing an increasing percentage of our overall revenue in the long-term. We have presented NeueHealth first in the following discussion, consistent with management’s view of our business.
NeueHealth. Our healthcare enablement and technology business, NeueHealth, is developing the next generation, integrated healthcare system. NeueHealth significantly reduces the friction and current lack of coordination between payors and providers to enable a truly consumer-centric healthcare experience. As of September 2021, NeueHealth works with nearly 250,000 care provider partners and delivers high-quality virtual and in-person clinical care through our 44 owned primary care clinics within its integrated care delivery system. Through those risk-bearing clinics, NeueHealth maintains over 200,000 unique patient relationships as of September 30, 2021, over 170,000 of which are served through value-based arrangements, across multiple payors. In addition to our directly owned clinics, NeueHealth manages care for an additional 87 clinics through its additional affiliated clinics.
NeueHealth engages in local, personalized care delivery in multiple ways, including:
•Integrated Care Delivery– NeueHealth operates clinics providing comprehensive care to all populations.
•Bright Health Network– A key component of our NeueHealth business is our ecosystem of Care Partners with whom we contract in service of Bright HealthCare today.
•Value Services Organization– NeueHealth empowers high-performing primary care practices and care delivery organizations to succeed in their evolution towards risk-bearing care delivery.
NeueHealth receives network rental fees from Bright HealthCare for the delivery of NeueHealth’s Care Partner and network services. In addition, NeueHealth contracts directly with Bright HealthCare to provide care through its managed and affiliated
28

Table of Contents
clinics. Other NeueHealth customers include external payors, third party administrators, affiliated providers and direct-to-government programs.
Bright HealthCare. Our healthcare financing and distribution business, Bright HealthCare, delivers simple, personal, and affordable solutions to integrate the consumer into Bright Health’s alignment model. Bright HealthCare currently aggregates and delivers healthcare benefits to over 720,000 consumers through its various offerings, serving consumers across multiple product lines in 14 states and 99 markets. We also participate in a number of specialized plans and recently began offering employer group plans.
Bright HealthCare’s customers include commercial health plans across 11 states, which serve approximately 607,000 individuals, as well as MA products in 11 stat es, which serve approximately 114,000 lives and generally focus on higher risk, special needs populations. We believe we are well-positioned to grow our Medicaid and Employer administrative services only (“ASO”) products, which would provide strategic diversification and be highly complementary to our aligned model.
Key Factors Affecting Our Performance
We believe that the growth and future success of our business depends on a number of factors described below. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address to sustain our growth and continue to improve results of operations.
Bright HealthCare’s ability to grow membership and retain consumers drives revenue growth
Bright HealthCare products are primarily sold for the following year through an annual selling season, which includes the open enrollment period for Individual and Family Plan products and annual enrollment period for Medicare Advantage. Outside of an annual selling season, IFP and MA products typically can only be sold during special enrollment periods based on the consumer’s eligibility status and certain life events. It is critical to effectively engage both prospective and existing consumers through our multi-channel distribution strategy. For both IFP and MA products, we aim to offer competitive benefits at an affordable price to meet the needs of our consumers. Our IFP products membership typically peaks after the open enrollment period and experiences modest levels of attrition until year-end. We have historically increased our MA consumer base during special enrollment periods, given our consumers' eligibility to enroll during those periods.
Our MA business is afforded additional in-year growth opportunity due to its focus on serving low-income seniors and special needs individuals, who can enroll in and change MA health plans at any time. Therefore, constant engagement with this population is critical to effectively retain membership and drive in-year growth. MA products are generally associated with higher revenue and higher medical cost ratios (“MCR”) as compared to IFP products, particularly with respect to special needs plans.
Bright HealthCare’s ability to capture complete and accurate risk adjustment data affects revenue
Portions of premium revenue from our IFP products and MA plans are determined by the applicable Centers for Medicare and Medicaid Services (“CMS”) risk adjustment models, which compensate insurers based on the underlying health status (acuity) of insured consumers. CMS requires that a consumer’s health status be documented annually and accurately submitted to CMS to determine the appropriate risk adjustment. Ensuring that complete and accurate health conditions of our consumers are captured within documentation submitted to CMS is critical to recognizing accurate risk adjustment, which is reflected in our revenue year-over-year.
Bright HealthCare’s ability to drive lower unit costs and medical utilization reduces medical costs and MCR
Bright HealthCare utilizes our Bright Health Network to provide healthcare services primarily within its exclusive provider networks under capitated contracts and fee-for-service arrangements. Certain provider and payor contracts include value-based incentive compensation based on providers meeting contractually defined quality and financial performance metrics. To effectively manage medical costs, Bright HealthCare must ensure a consumer’s healthcare needs are primarily delivered through its Care Partners to recognize discounted contracted rates, which limits the amount of out-of-network utilization that
29

Table of Contents
can have an adverse financial impact on medical costs and MCR. Out-of-network utilization is typically higher upon entry into new markets, which increases medical costs during periods of market expansion.
Our business is generally affected by the seasonal patterns of medical expenses. With respect to IFP products, medical costs tend to be lower early in the year and increase toward the end of year, driven by high deductible plan designs and out-of-pocket maximums over the course of the policy year, which shift more costs to us in the second half of the year as we pay a higher proportion of claims. With respect to MA plans, medical costs are impacted by the severity of the flu season, generally from December to March, and we typically experience slightly higher Part D medical costs early in the year, which decline toward the end of year due to standard plan design.
NeueHealth’s ability to identify and align with high-performing care delivery partners drives performance
NeueHealth engages providers through a variety of alignment options ranging from having providers participate in our networks to having providers employed by us. As we enter new markets and expand our offerings, we must build an ecosystem of care delivery assets capable of supporting both our Bright HealthCare business as well as third-party payors.
NeueHealth’s ability to deliver and enable high-quality, value-based care drives revenue
NeueHealth supports and manages providers in fee-for-service and value-based contracts with payors. We help organizations enter value-based arrangements designed around their needs, while simultaneously empowering them with the tools and capabilities necessary to maximize their success. In order to drive financial performance, NeueHealth must effectively manage risk and continue to develop and deliver tools and services supporting both managed and affiliated providers.
Bright Health Group’s ability to achieve operating cost efficiencies and scale profitably
Bright Health Group, including Bright HealthCare and NeueHealth, will need to continue investing in operating platforms, processes, people, and resources to enable our businesses to scale profitably. We leverage centralized shared services for operational, clinical, technological, and administrative functions to support the segments in a cost-effective and efficient manner.
Components of Our Results of Operations
Revenue
We generate revenue from premiums, including value-based provider revenue, and fee-for-service provider revenue received from consumers and payors, as well as income from our investments.
Premium revenue
Premium revenue is derived primarily from Bright HealthCare IFP products and MA plans sold to consumers as well as NeueHealth value-based provider revenue from serving patients.
Bright HealthCare Commercial premium revenue
The sources of commercial premium revenue are primarily IFP products which are comprised of advanced premium tax credit subsidies that are based on consumers income levels and compensated directly by the federal government, as well as billed consumer premiums. IFP products reflect adjustments related to the Patient Protection and Affordable Care Act (“ACA”) risk adjustment program, which adjusts premium revenue based on the demographic factors and health status of each consumer as derived from current-year medical diagnoses.
Bright HealthCare MA premium revenue
The sources of MA premium revenue are Medicare Part C premiums related to consumers’ medical benefit coverage and Part D premiums related to consumers’ prescription drug benefit coverage. Medicare Part C premiums are comprised of CMS monthly
30

Table of Contents
capitation premiums that are risk adjusted based on CMS defined formulas using consumers’ demographics and prior-year medical diagnoses. Medicare Part D premiums are comprised of CMS monthly capitation premiums that are risk adjusted, consumer billed premiums and CMS low-income premium subsidies for the Company’s insurance risk coverage. Medicare Part D premiums are subject to risk sharing with CMS under the risk corridor provisions based on profitability of the Part D benefit. As a percentage of our total consolidated revenue, premium revenues from CMS were 30% and 37% for the nine months ended September 30, 2021 and 2020, respectively, which are included in our Bright HealthCare segment.
NeueHealth premium revenue
NeueHealth premium revenue represents revenue under value-based arrangements entered into by NeueHealth’s Value Services Organization and affiliated medical groups in which the responsibility for control of an attributed patient’s medical care is transferred, in part or wholly, to such medical groups. Such revenue includes capitation payments, as well as quality incentive payments, and shared savings distributions payable upon achievement of certain financial and quality metrics. Value-based revenue shifts responsibility for control over the medical care delivered to attributed patients to the Company and aligns incentives around the overall well-being of the payor’s consumers.
We expect that as our NeueHealth business continues to grow, NeueHealth premium revenue will become an increasing proportion of our overall revenue.
Service revenue
Service revenue primarily represents revenue from fee-for-service payments received by NeueHealth’s affiliated medical groups. These include patient copayments and deductibles collected directly from patients and payments from private and government payors based upon contractual terms that define the fee-for-service reimbursement for specific procedures performed.
In addition, service revenue includes network service revenue generated by NeueHealth’s Bright Health Network. Bright HealthCare is currently the only customer of Bright Health Network.
Investment income
The sources of investment income are interest income and realized gains and losses derived from the Company’s investment portfolio that is comprised of debt securities of the U.S. government and other government agencies, corporate investment grade, money market funds and various other securities, as well as realized and unrealized gains and losses from equity securities.
Operating Costs
Medical costs
Medical costs consist of reimbursements to providers for medical services, costs of prescription drugs, supplemental benefits, reinsurance and quality incentive and shared savings compensation to providers. The Company contracts with hospitals, physicians and other providers of healthcare primarily within its exclusive provider networks under fee-for-service and value-based arrangements. Emergency medical services incurred out-of-network are a covered benefit to consumers and reimbursed to providers according to the Company’s payment policies that are based on applicable regulations. Prescription drug costs are determined based on the contract with our pharmacy benefits manager, which includes pharmacy rebates that are received for certain drug utilization levels or contracted minimums. Dental, vision, and other supplemental medical services are provided to consumers under capitated arrangements. Reinsurance arrangements enable us to cede a specified percent of our premiums and claims to our third-party reinsurers. Under such contracts, the reinsurer is paid to cover claims-related losses over a specified amount, which mitigates catastrophic risk. We make quality incentive and shared savings compensation payments to certain providers in accordance with the terms of the contractual arrangement upon the achievement of certain financial and quality metrics.
31

Table of Contents
Operating Costs
Operating costs are comprised of the expenses necessary to execute the Company’s business operations. These include employee compensation for salaries and related benefit costs, share-based compensation, outsourced vendor contracted service and technology fees, professional services, technological infrastructure and service fees, facilities costs and other administrative expenses. Operating costs also include payments made by Bright HealthCare to NeueHealth for the provision of Bright Health Network services; selling and marketing expenses from external broker commissions and advertising, primarily related to consumer acquisition; and premium taxes, exchange fees and other regulatory costs, which are primarily based on premium revenue. We expect operating costs to increase in absolute amounts as our business grows, but to decrease as a percentage of our revenue in the long-term.
Depreciation and Amortization
Depreciation and amortization consist of depreciation of property, equipment and capitalized software, as well as amortization of definite-lived intangible assets acquired in business combinations, including trade names, customer relationships, and reacquired rights.
Other Income
Income Tax Expense (Benefit)
Income tax expense (benefit) consists primarily of changes to our current and deferred federal tax assets and liabilities net of applicable valuation allowances.
Initial Public Offering
On June 23, 2021, the Company’s Registration Statement on Form S-1 for the initial public offering of shares of common stock was declared effective by the U.S. Securities & Exchange Commission. The Company’s common stock began trading on the NYSE under the ticker symbol “BHG” on June 24, 2021. The IPO closed on June 28, 2021 and the Company sold 51,350,000 shares of common stock at a price of $18.00 per share. In aggregate, the shares issued in the offering generated $887.3 million in net proceeds, the amount of which is net of $37.0 million in underwriters’ discounts and commissions. Immediately effective upon the closing of our IPO, all 167,731,830 shares of our then outstanding preferred stock were converted into 427,897,381 shares of common stock, causing the Company to reclassify $1.8 billion from redeemable preferred stock within temporary equity to common stock and additional paid-in capital on our consolidated balance sheet.
We utilized a portion of the net proceeds to repay the $200.0 million principal balance of indebtedness outstanding under our revolving credit agreement originally entered into on March 1, 2021 and the associated interest and other costs of $3.2 million. Additionally, we used a portion of the proceeds to fund the acquisition of Centrum as described in Note 2, Business Combinations. The remainder of the net proceeds will be used for general corporate purposes.
See further discussion related to the IPO as described in Note 1, Basis of Presentation, to Bright Health Group, Inc.’s unaudited condensed consolidated financial statements.
COVID-19 Update
The COVID-19 pandemic, including its effect on the macroeconomic environment, and the response of our local, state, and federal governments to contain and manage the virus, continues to impact our business. The emergence of COVID-19 variants in the United States and abroad continues to prolong the risk of additional surges of the virus. In addition, some individuals have delayed or are not seeking routine medical care to avoid COVID-19 exposure. These and other responses to the COVID-19 pandemic have meant that our MCR may be subject to additional uncertainty as certain segments of the economy and workforce come back on line, members resume care that may have been foregone, and the broader population becomes vaccinated.
32

Table of Contents
We have experienced impacts to our business from COVID-19, which have varied as the pandemic progressed. Initially, as a result of the suspension of elective surgeries and deferral of medical care, we experienced decreased medical utilization, particularly in the second quarter of 2020. Since then, medical utilization has returned to more normal levels and adverse financial impacts from inpatient admissions emerged primarily due to increased average length of stays.
I n the third quarter of 2021, our results were impacted by COVID-19 trends in two of our largest IFP markets. Florida and North Carolina both saw significant increases in COVID-19 cases in the third quarter, with Centers for Disease Control and Prevention (“CDC”) data indicating average daily COVID-19 case counts were up nearly 300% in each state when compared to the second quarter of 2021. In addition, during the third quarter of 2021, the Southeast United States experienced average daily COVID-19 counts increasing nearly 250% when compared against the second quarter of 2021. This drove our COVID-19 expense in the third quarter of 2021 up 65.6% from the second quarter and our IFP COVID expense was up more than 160% compared to the second quarter of 2021. Fo r the three months ended September 30, 2021 and 2020, the impact of COVID-19 increased our MCR by 540 basis points and 390 basis points, respectively, reflecting an increase in medical costs of $55.6 million and $13.3 million, respectively. For the nine months ended September 30, 2021 and 2020, the impact of COVID-19 increased our MCR by 420 basis points and 290 basis points, respectively, reflecting an increase in medical costs of $124.0 million and $23.8 million, respectively.
Overall measures to contain the COVID-19 outbreak may remain in place for a significant period of time, as certain geographic regions have experienced a resurgence of COVID-19 infections and new strains of COVID-19 that appear to be more transmissible have emerged. Although the number of people who have been vaccinated has been increasing, the duration and severity of this pandemic is unknown and the extent of the business disruption and financial impact depends on factors beyond our knowledge and control.
Business Update
We continue to make progress on our model that aligns the financing of care with the delivery of care. We are focused on serving the consumer in retail healthcare marketplaces, including the exchange and government direct-to-consumer markets. Both businesses are supported by our Bright Health Intelligent Operating System (“BiOS”) technology platform, where we continue to see efficiencies due to that investment. We view the following five key themes as important in connection with our third quarter and year-to-date results:
1.We continue to demonstrate significant growth – We continue to experience strong growth across both of our businesses. Bright HealthCare now serves over 720,000 consumers as of September 30, 2021, up 247% compared to the third quarter of 2020. This includes over 114,000 MA members. In commercial, the growth in members reflects the extended 2021 Special Enrollment Period in IFP with enrollment of nearly 607,000 consumers at the end of the third quarter of 2021 up nearly 10% from the end of the second quarter of 2021. NeueHealth also continues to demonstrate growth with a total of 131 owned and affiliated Primary Care Clinics serving over 170,000 patients under value-based arrangements as of September 30, 2021.
2.We have delivered consistent performance – Our third quarter 2021 results reflect quarterly variability due to the negative impact of an increase in direct COVID-19 costs, as well as risk adjustment pressures from the significant contribution of new 2021 membership and COVID-19 related challenges in member engagement. The extended Special Enrollment Period led to significant membership growth beyond the interim capacity within the owned and affiliated parts of our integrated systems of care, which we have alleviated through an accelerated pace of clinic and affiliate development and additional investments in our operating platform. While we did experience a modest reduction in utilization from non-COVID related procedures, such as certain elective inpatient surgeries and other diagnostic tests, the cost benefit was more than offset by the negative impact to appropriately diagnose our newly attributed members, which resulted in an increase in our risk adjustment payable. We believe our year-to-date results better reflect the underlying performance of our business than the third quarter results. We expect a number of the factors that drove volatility in the third quarter of 2021 to normalize in 2022 as the contribution from retained consumers increases, direct COVID-19 costs decrease, and as capacity improvements in our aligned integrated systems of care drive improved gross margin.
33

Table of Contents
3.We are driving differentiation through NeueHealth – We are seeing strong growth in NeueHealth’s revenue and operating income that we believe highlights the power of our owned clinics and our affiliates within our aligned model. The growth in our NeueHealth business reflects the continued investments we are making in value-based care, as well as the Centrum acquisition, which closed on July 1, 2021. We are continuing to expand on this model in Florida, as well as bringing this model to new markets, including Texas and North Carolina in 2022. Our previous target to open more than 25 de novo clinics in 2022 is still on track. We are also bringing in more affiliates into a fully aligned model, where providers are clinically, financially, and technologically aligned with Bright HealthCare. In addition, we have a robust pipeline of third-party payors interested in leveraging our integrated model across multiple populations as we go into 2022 and, as a result, expect to see growth in health plan customers in 2022.
4.We are building one technology platform – We continue investing in the BiOS back-end infrastructure, DocSquad consumer and provider-facing tools, and acquisition integration. We have been making investments and accelerating our timeline for integration to one platform, which has resulted in some near-term cost structure headwinds. We are making progress on integrating the health plan assets we acquired, with integration of appropriate corporate office and support functions expected to be completed in 2022, our Bright HealthCare IFP business expected on a single platform in 2023, and full operating platform unification to follow.
5.Continued future growth – NeueHealth will continue to be an increasingly important component of our business. We expect growth for the business in 2022 and continued integration of NeueHealth with our Bright HealthCare business. In Florida and Texas, we expect to see movement toward health plan offerings that leverage our owned and affiliated clinics within our aligned Integrated Systems of Care. Direct Contracting also provides a new growth opportunity for NeueHealth, adding to the total lives in fully aligned value-based arrangements and contributing to revenue in a capital efficient model. In Bright HealthCare, we expect growth in our core MA markets with a focus on higher complexity patient populations, including C-SNP and D-SNP products, specific ethnic communities requiring culturally competent care and service models, and states with an opportunity for IFP consumers to age into MA plans. In IFP, we are well-positioned based on where we have set rates for 2022, with our plans consistently the lowest or second-lowest cost silver plan in core growth markets. Additionally, we are expanding our addressable market next year, entering four new states including Texas and Georgia, and offering IFP plans for the first time California, which represent three of the largest ACA markets in the country. At the same time, we will remain disciplined in our growth, making appropriate rate adjustments based on our 2021 experience and competitive positioning.
Key Metrics and Non-GAAP Financial Measures
In addition to our GAAP financial information, we review a number of operating and financial metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate our business plan and make strategic decisions.

| As of September 30,
| 2021 |  | 2020
Bright HealthCare Consumers Served |  |  |
Commercial(1) | 606,594 |  |  | 149,794 |
Medicare Advantage | 114,094 |  |  | 57,751 |
NeueHealth Patients |  |  |
Value-based Care Patient Lives | 170,211 |  |  | 19,141 |

(1) Commercial plans include IFP and employer plans. Prior to 2021, our commercial business was solely comprised of IFP products.
Bright HealthCare Consumers Served
Consumers served include Bright HealthCare individual lives served via health insurance policies across multiple lines of business, primarily attributable to IFP products and MA plans in markets across the country. We believe growth in the number of consumers is a key indicator of the performance of our Bright HealthCare business. It also informs our management of the
34

Table of Contents
operational, clinical, technological and administrative functional area needs that will require further investment to support expected future consumer growth.
Value-Based Care Patients
Value-based care patients are patients attributed to providers contracted under varied value-based care delivery models in which the responsibility for control of an attributed patient’s medical care is transferred, in part or wholly, to our NeueHealth managed medical groups. We believe growth in the number of value-based care patients is a key indicator of the performance of our NeueHealth business. It also informs our management of the operational, clinical, technological and administrative functional area needs that will require further investment to support expected future patient growth. Over time, we expect our value-based care patients will increase as we convert fee-for-service arrangements into value-based care financial arrangements.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
($ in thousands) | 2021 |  | 2020 |  | 2021 |  | 2020
Net Loss | $ | (296,722) |  |  | (59,256) |  |  | $ | (364,990) |  |  | (84,610) |
Adjusted EBITDA(1) | $ | (245,918) |  |  | (54,084) |  |  | $ | (290,757) |  |  | (81,188) |

(1)See “Non-GAAP Financial Measures” below for reconciliations to the most directly comparable financial measures calculated in accordance with GAAP and related disclosures.
Non-GAAP Financial Measures
Adjusted EBITDA
We define Adjusted EBITDA as net loss excluding interest expense, income taxes, depreciation and amortization, adjusted for the impact of acquisition and financing-related transaction costs, share-based compensation, changes in the fair value of contingent consideration and contract termination costs. Adjusted EBITDA has been presented in this Quarterly Report as a supplemental measure of financial performance that is not required by, or presented in accordance with, GAAP, because we believe it assists management and investors in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA is useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management uses Adjusted EBITDA to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.
Adjusted EBITDA is not a recognized term under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. Additionally, this measure is not intended to be a measure of free cash flow available for management’s discretionary use as we do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentation of this measure has limitations as an analytical tool and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentation of this measure may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.
35

Table of Contents
The following table provides a reconciliation of net loss to Adjusted EBITDA for the periods presented:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
($ in thousands) | 2021 |  | 2020 |  | 2021 |  | 2020
Net loss | $ | (296,722) |  |  | $ | (59,256) |  |  | $ | (364,990) |  |  | $ | (84,610) |
Interest expense | 1,594 |  |  | — |  |  | 6,282 |  |  | — |
Income tax expense (benefit) | 73 |  |  | — |  |  | (18,225) |  |  | (9,162) |
Depreciation and amortization | 14,205 |  |  | 2,678 |  |  | 25,981 |  |  | 5,550 |
Transaction costs (a) | 448 |  |  | 965 |  |  | 5,598 |  |  | 3,312 |
Share-based compensation expense (b) | 24,180 |  |  | 1,529 |  |  | 43,234 |  |  | 3,722 |
Change in fair value of contingent consideration (c) | 304 |  |  | — |  |  | 1,363 |  |  | — |
Contract termination costs (d) | 10,000 |  |  | — |  |  | 10,000 |  |  | — |
Adjusted EBITDA | $ | (245,918) |  |  | $ | (54,084) |  |  | $ | (290,757) |  |  | $ | (81,188) |

(a)Transaction costs include accounting, tax, valuation, consulting, legal and investment banking fees directly relating to business combinations and certain costs associated with our initial public offering. These costs can vary from period to period and impact comparability, and we do not believe such transaction costs reflect the ongoing performance of our business.
(b)Represents non-cash compensation expense related to stock option and restricted stock award grants, which can vary from period to period based on a number of factors, including the timing, quantity and grant date fair value of the awards.
(c)Represents the non-cash change in fair value of contingent consideration from business combinations, which is remeasured at fair value each reporting period. There was no material activity for periods prior to the first quarter of 2021.
(d)Represents amount paid for early termination of an existing vendor contract.
36

Table of Contents
Results of Operations
The following table summarizes our unaudited Condensed Consolidated Statements of Income (Loss) data and other financial information for the three and nine months ended September 30, 2021 and 2020.

($ in thousands) | Three Months Ended September 30, |  | Nine Months Ended September 30,
Condensed Consolidated Statements of Income (loss) and operating data: | 2021 |  | 2020 |  | 2021 |  | 2020
Revenue: |  |  |  |  |  |  |
Premium revenue | $ | 1,020,233 |  | $ | 345,426 |  | $ | 2,922,950 |  | $ | 827,135
Service revenue | 11,079 |  | 4,920 |  | 31,602 |  | 13,344
Investment income | 47,345 |  | 1,774 |  | 112,503 |  | 7,063
Total revenue | 1,078,657 |  | 352,120 |  | 3,067,055 |  | 847,542
Operating expenses |  |  |  |  |  |  |
Medical costs | 1,050,943 |  | 311,319 |  | 2,640,143 |  | 675,114
Operating costs | 309,790 |  | 97,379 |  | 779,090 |  | 260,650
Depreciation and amortization | 14,205 |  | 2,678 |  | 25,981 |  | 5,550
Total operating expenses | 1,374,938 |  | 411,376 |  | 3,445,214 |  | 941,314
Operating loss | (296,281) |  | (59,256) |  | (378,159) |  | (93,772)
Interest expense | 1,594 |  | — |  | 6,282 |  | —
Other income | (1,226) |  | — |  | (1,226) |  | —
Loss before income taxes | (296,649) |  | (59,256) |  | (383,215) |  | (93,772)
Income tax expense (benefit) | 73 |  | — |  | (18,225) |  | (9,162)
Net loss | (296,722) |  | (59,256) |  | (364,990) |  | (84,610)
Net earnings attributable to non-controlling interest | (3,942) |  | — |  | (5,354) |  | —
Net loss attributable to Bright Health Group, Inc. common shareholders | $ | (300,664) |  | $ | (59,256) |  | $ | (370,344) |  | $ | (84,610)
Adjusted EBITDA | $ | (245,918) |  | $ | (54,084) |  | $ | (290,757) |  | $ | (81,188)
Medical Cost Ratio (1) | 103.0% |  | 90.1% |  | 90.3% |  | 81.6%
Operating Cost Ratio (2) | 28.7% |  | 27.7% |  | 25.4% |  | 30.8%

(1)Medical Cost Ratio is defined as medical costs divided by premium revenue.
(2)Operating Cost Ratio is defined as operating costs divided by total revenue.
Total revenue s increased by $726.5 million, or 206.3%, for the three months ended September 30, 2021 as compared to the same period in 2020, which was largely driven by an increase in Bright HealthCare consumers of approximately 513,000 consumer lives, or 247.2%, primarily from organic growth in IFP within our Commercial business, including the 2021 Special Enrollment Period, as well as organic and inorganic contributions from the MA business. Increases in our risk adjustment liability partially offset the total revenue increases. For the three months ended September 30, 2021, we recognized a change in estimate for risk adjustment of $134.0 million due to a change in our risk adjustment payable accrual as a result of updated data inputs used to calculate IFP members’ expected full year risk scores, of which $89.3 million related to the first six months of 2021. The three months ended September 30, 2021 included $200.0 million from the acquisitions of PMA, THNM, Zipnosis, CHP and Centrum. Total revenues increased by $2.2 billion, or 261.9%, for the nine months ended September 30, 2021 as compared to the same period in 2020, primarily driven by organic consumer growth in our Commercial business, as well as favorable rate impacts in our Commercial business. The nine months ended September 30, 2021 included $699.8 million from acquisitions for which there was no comparable amount in the nine months ended September 30, 2020. The three and nine months ended September 30, 2021 also experienced an increase in investment income compared to the same periods in 2020, primarily driven by unrealized gains from investments in equity securities of $46.3 million and $109.0 million, respectively.
37

Table of Contents
Medical costs increased by $739.6 million, or 237.6%, for the three months ended September 30, 2021 as compared to the same period in 2020. The increase in medical costs was driven by an increase in consumers through both organic growth in our Commercial and MA businesses and inorganic growth attributable to the acquisitions of PMA, THNM, CHP and Centrum, as well as increased medical costs from COVID-19. Medical costs increased by $2.0 billion, or 291.1%, for the nine months ended September 30, 2021 as compared to the same period in 2020. The increase in medical costs was driven by consistent factors with the three months ended September 30, 2021 with additional impact from the acquisition of Brand New Day, which was acquired on April 30, 2020.
Our MCR of 103.0% for the three months ended September 30, 2021 increased 1,290 basis points compared to the same period in 2020. The Special Enrollment Period and our overall growth created challenges for capturing underlying risk, and we were impacted by COVID-19 related costs given the significant portion of our consumers in Florida, as well as our significant mix of new members given our consumer growth in 2021. Our MCR for the three months ended September 30, 2021 included a 540 basis point unfavorable impac t from COVID-19 related costs and a 900 basis point unfavorable impact from non-COVID prior period developments (“PPD”) primarily related to a reduction in premium revenue related to an increase in our risk adjustment payable. Our MCR for the three months ended September 30, 2020 included a 390 basis point unfavorable impact from COVID-19 costs and a 530 basis point favorable impact from non-COVID PPD.
Our MCR of 90.3% for the nine months ended September 30, 20 21 increased 870 basis points compared to the same period in 2020, which reflected the challenges of COVID-19, significant growth and the Special Enrollment Period. Our MCR for the nine months ended September 30, 2021 included a 420 basis point unfavorable impact from COVID-19 related costs and a 90 basis point unfavorable impact from non-COVID PPD. Our MCR for the nine months ended September 30, 2020 included a 290 basis point unfavorable impact from COVID-19 costs, a 200 basis point favorable impact from non-COVID PPD and a 150 basis point favorable impact due to deferred utilization. T he MCR in both 2021 periods was also impacted by increased medical costs from MA product mix as a result of the Brand New Day and CHP acquisitions.
Operating costs increased by $212.4 million, or 218.1%, for the three months ended September 30, 2021 as compared to the same period in 2020. Operating costs increased by $518.4 million, or 198.9%, for the nine months ended September 30, 2021 as compared to the same period in 2020. The increase in operating costs in both periods was primarily due to increases in operating costs from new market entry, increased marketing and selling expenses related to the 2021 special enrollment period in our Commercial business and increased compensation and benefit costs driven by an increase in employees and an increase in share-based compensation costs.
Our operating cost ratio of 28.7% for the three months ended September 30, 2021, increased 100 basis points compared to the same period in 2020 primarily due to increased compensation and benefit costs driven by an increase in employees and an increase in share-based compensation costs as well as an early contract termination charge in the current-year period. Our operating cost ratio of 25.4% for the nine months ended September 30, 2021 improved 540 basis points compared to the same period in 2020 primarily due to operating costs increasing at a slower rate than the increased premium revenues earned due to consumer growth, as we continue to gain leverage on our operating costs as we grow, partially offset by an increase in broker commission costs associated with new membership growth .
Depreciation and amortization increased by $11.5 million, or 430.4%, for the three months ended September 30, 2021 as compared to the same period in 2020, primarily due to the $11.3 million of amortization expense resulting from intangible assets acquired in the PMA, THNM, Zipnosis, CHP, and Centrum acquisitions, for which there were no comparable amounts in the three months ended September 30, 2020. Depreciation and amortization increased by $20.4 million, or 368.1%, for the nine months ended September 30, 2021 as compared to the same period in 2020, primarily due to $19.5 million from intangible assets acquired for which there were no comparable amounts in the nine months ended September 30, 2020.
Interest expense was $1.6 million and $6.3 million for the three and nine months ended September 30, 2021, respectively, which was due to interest on the Credit Agreement we entered into in March 2021, as well as amortization of debt issuance costs. We did not have any interest expense for either of the comparable periods in 2020.
Income tax was an expense of $0.1 million and a benefit of $18.2 million for the three and nine months ended September 30, 2021, respectively. For the three months ended September 30, 2021, the income tax expense largely relates to amortization of
38

Table of Contents
originating goodwill from asset acquisitions. For the nine months ended September 30, 2021, the overall tax benefit is primarily due to the release of valuation allowance in connection with new deferred tax liabilities recorded on identifiable intangibles as part of business combination accounting for the Zipnosis, THNM, and CHP stock acquisitions, as well as a measurement period adjustment related to the BND acquisition. We recognized an income tax benefit of $9.2 million during the nine months ended September 30, 2020, which was due to the impact of goodwill and intangible assets acquired in the Brand New Day acquisition in April 2020.

Bright HealthCare |  |  |  |  |  |  |
($ in thousands) | Three Months Ended September 30, |  | Nine Months Ended September 30,
Statement of income (loss) and operating data: | 2021 |  | 2020 |  | 2021 |  | 2020
Bright HealthCare: |  |  |  |  |  |  |
Commercial revenue | $ | 625,926 |  |  | $ | 170,434 |  |  | $ | 1,930,925 |  |  | $ | 510,915 |
Medicare Advantage revenue | 368,599 |  |  | 173,038 |  |  | 929,374 |  |  | 310,270 |
Investment income | 1,087 |  |  | 1,774 |  |  | 3,491 |  |  | 7,063 |
Total revenue | 995,612 |  |  | 345,246 |  |  | 2,863,790 |  |  | 828,248 |
Operating expenses: |  |  |  |  |  |  |
Medical costs | 1,019,081 |  |  | 311,319 |  |  | 2,588,196 |  |  | 675,114 |
Operating costs | 275,218 |  |  | 88,916 |  |  | 707,520 |  |  | 237,430 |
Depreciation and amortization | 4,584 |  |  | 2,274 |  |  | 11,524 |  |  | 4,131 |
Total operating expenses | 1,298,883 |  |  | 402,509 |  |  | 3,307,240 |  |  | 916,675 |
Operating loss | $ | (303,271) |  |  | $ | (57,263) |  |  | $ | (443,450) |  |  | $ | (88,427) |
Medical Cost Ratio (MCR) | 102.5 | % |  | 90.6 | % |  | 90.5 | % |  | 82.2 | %

Commercial reven ue increase d by $455.5 million, or 267.3%, for the three months ended September 30, 2021 as compared to the same period in 2020. Commercial revenue increased by $1.4 billion, or 277.9%, for the nine months ended September 30, 2021 as compared to the same period in 2020. The increase in revenues in both 2021 periods compared to 2020, was driven by an increase in consumer lives of approximately 513,000 due to organic growth, higher net premium rates in certain markets, plan mix, and inorganic growth from the acquisition of THNM, which are partially offset by an increase in risk adjustment payables. The three months ended September 30, 2021 included a change in estimate for the expected full-year risk adjustment scoring impact of $134.0 million, of which $89.3 million related to the first six months of 2021.
MA reven ue increased by $195.6 million, or 113.0%, for the three months ended September 30, 2021 as compared to the same period in 2020. MA reven ue increased by $619.1 million, or 199.5%, for the nine months ended September 30, 2021 as compared to the same period in 2020. The three and nine months ended September 30, 2021 included $125.7 million and $266.8 million, respectively, of revenue from our acquisition of CHP on April 1, 2021. The remaining increase was primarily driven by volume increases due to organic growth.
Medical costs increased by $707.8 million, or 227.3%, for the three months ended September 30, 2021 as compared to the same period in 2020. For the three months ended September 30, 2021 and 2020, the impact of COVID-19 increased our medical costs $55.6 million and $13.3 million, respectively. Medical costs increased by $1.9 billion, or 283.4%, for the nine months ended September 30, 2021 as compared to the same period in 2020. For the nine months ended September 30, 2021 and 2020, the impact of COVID-19 increased our medical costs by $124.0 million and $23.8 million, respectively. The increase in both 2021 periods is also due to an increase in consumers driven by organic growth, unfavorable medical cost rates and inorganic growth as a result of acquisitions.
Our MCR of 102.5% for the three months ended September 30, 2021 increased 1,180 basis points compared to the same period in 2020. Our MCR for the three months ended September 30, 2021 included a 560 basis point unfavorable impact from COVID-19 related costs and a 910 basis p oint unfavorable impact from non-COVID PPD related to risk adjustment. Our MCR
39

Table of Contents
for the three months ended September 30, 2020 included a 390 basis point unfavorable impact from COVID-19 costs and a 530 basis point favorable impact from non-COVID PPD.
Our MCR of 90.5% for the nine months ended September 30, 2021 increased 830 basis points compared to the same period in 2020. Our MCR for the nine months ended September 30, 2021 included a 430 basis point unfavorable impact from COVID-19 related costs and a 90 basis p oint unfavorable impact from non-COVID PPD. Our MCR for the nine months ended September 30, 2020 included a 290 basis point unfavorable impact from COVID-19 costs, a 210 basis point favorable impact from non-COVID P PD and a 150 basis point unfavorable impact from deferred utilization. The MCR in both 2021 periods was also impacted by increased medical costs from MA product mix as a result of the Brand New Day and CHP acquisitions and an increase in risk adjustment payable, which was partially offset by favorable market mix and rate in IFP.
Operating costs increased by $186.3 million, or 209.5%, for the three months ended September 30, 2021 as compared to the same period in 2020. Operating costs increased by $470.1 million, or 198.0%, for the nine months ended September 30, 2021 as compared to the same period in 2020. The increase in both periods during 2021 compared to the same periods in 2020 was primarily due to increases in operating costs from new market entry, increased marketing and selling expenses related to the 2021 SEP in our Commercial business and increased compensation and benefit costs driven by an increase in employees and an increase in share-based compensation costs. In addition, the 2021 periods also have increased operating costs from acquisitions, which do not have a comparable prior period impact.
Depreciation and amortization increased by $2.3 million, or 101.6%, for the three months ended September 30, 2021 as compared to the same period in 2020. Depreciation and amortization increased by $7.4 million, or 179.0%, for the nine months ended September 30, 2021 as compared to the same period in 2020. The increase in the three and nine month periods ended September 30, 2021 was primarily due to amortization expense of $2.6 million and $7.0 million, respectively, resulting primarily from intangible assets acquired for which there were no comparable amounts in the 2020 periods.

NeueHealth |  |  |  |  |  |  |
($ in thousands) | Three Months Ended September 30, |  | Nine Months Ended September 30,
Statement of income (loss) and operating data: | 2021 |  | 2020 |  | 2021 |  | 2020
NeueHealth: |  |  |  |  |  |  |
Premium revenue | $ | 156,990 |  |  | $ | 1,954 |  |  | $ | 221,836 |  |  | $ | 5,950 |
Service revenue | 19,556 |  |  | 7,647 |  |  | 54,809 |  |  | 21,520 |
Investment income | 46,258 |  |  | — |  |  | 109,012 |  |  | — |
Total revenue | 222,804 |  |  | 9,601 |  |  | 385,657 |  |  | 27,470 |
Operating expenses |  |  |  |  |  |  |
Medical costs | 163,279 |  |  | — |  |  | 211,176 |  |  | — |
Operating costs | 42,914 |  |  | 11,190 |  |  | 94,733 |  |  | 31,396 |
Depreciation and amortization | 9,621 |  |  | 404 |  |  | 14,457 |  |  | 1,419 |
Total operating expenses | 215,814 |  |  | 11,594 |  |  | 320,366 |  |  | 32,815 |
Operating income (loss) | $ | 6,990 |  |  | $ | (1,993) |  |  | $ | 65,291 |  |  | $ | (5,345) |
Medical Cost Ratio (MCR) | 104.0 | % |  | — | % |  | 95.2 | % |  | — | %

Premium revenue increased by $155.0 million for the three months ended September 30, 2021 as compared to the same period in 2020. Premium revenue increased by $215.9 million for the nine months ended September 30, 2021 as compared to the same period in 2020. The increase in premium revenue for the three and nine months ended September 30, 2021 include s $137.2 million and $170.3 million, re spectively, from the acquisitions of PMA and Centrum, as well as an organic increase in patient lives.
40

Table of Contents
Service revenue increased by $11.9 million, or 155.7%, for the three months ended September 30, 2021 as compared to the same period in 2020. Service revenue increased by $33.3 million, or 154.7%, for the nine months ended September 30, 2021 as compared to the same period in 2020. The increase in service revenue in both 2021 periods is primarily driven by increased intercompany network contract service revenue with our Bright HealthCare segment, which is charged on a per consumer per month basis and has increased due to market expansion and an increase in consumer lives. The acquisitions of PMA on December 31, 2020 and Zipnosis on March 31, 2021 also contributed to the year-over-year increase in service revenue.
Investment income was $46.3 million and $109.0 million for the three and nine months ending September 30, 2021, respectively, due to unrealized gains on equity securities acquired in 2021. NeueHealth did not hold any investments during the three and nine months ended September 30, 2020.
Medical costs were $163.3 million and $211.2 million for the three and nine months ended September 30, 2021, respectively, which were primarily driven by an increase in patient lives as a result of the PMA and Centrum acquisitions, as well as organic growth in our value-based arrangements. MCR was 104.0% and 95.2% in the three and nine months ended September 30, 2021, respectively. There were no medical costs in the three and nine months ended September 30, 2020.
Operating costs increased by $31.7 million, or 283.5%, for the three months ended September 30, 2021 as compared to the same period in 2020. Operating costs increased by $63.3 million, or 201.7%, for the nine months ended September 30, 2021 as compared to the same period in 2020. The increase in both 2021 periods was primarily due to increased compensation and benefit costs from more employees, and outsourced vendor fees in support of consumer growth, as well as costs from the PMA, Zipnosis and Centrum acquisitions.
Depreciation and amortization increased by $9.2 million for the three months ended September 30, 2021 as compared to the same period in 2020. Depreciation and amortization increased by $13.0 million for the nine months ended September 30, 2021 as compared to the same period in 2020. The increase in the three and nine months ended September 30, 2021 was primarily due to amortization expense of $8.8 million and $12.4 million, respectively, resulting from intangible assets acquired for which there were no comparable amounts in the 2020 periods.
Liquidity and Capital Resources
We assess our liquidity in terms of our ability to generate adequate amounts of cash to meet current and future needs. Our expected primary uses on a short-term and long-term basis are for geographic and service offering expansion, acquisitions, and other general corporate purposes. We have historically funded our operations and acquisitions primarily through the sale of preferred stock, and more recently, through sales of our common stock, which generated cash proceeds of $887.3 million upon closing of our IPO on June 28, 2021.
Cash and investment balances held at regulated insurance entities are subject to regulatory restrictions and can only be accessed through dividends declared to the non-regulated parent company or through reimbursements from administrative services agreements with the parent company. The Company has declared one dividend from the regulated insurance entities to the parent company during the nine months ended September 30, 2021, and had no dividends for the same period in 2020. The regulated legal entities are required to hold certain minimum levels of risk-based capital and surplus to meet regulatory requirements. As of September 30, 2021 and December 31, 2020, the amounts held in risk-based capital and surplus at regulated insurance legal entities was in excess of the minimum requirements.
We expect to continue to incur operating losses and generate negative cash flows from operations for the foreseeable future due to the investments we intend to continue to make in expanding our operations and due to additional general and administrative costs we expect to incur in connection with operating as a public company. We believe that existing cash on hand, investments and amounts available under our Credit Agreement described below will be sufficient to satisfy our anticipated cash requirements for the next twelve months. However, we may seek additional capital to support our future growth plans and other strategic opportunities that may arise.
41

Table of Contents
Indebtedness
On March 1, 2021, we entered into a $350.0 million revolving credit agreement with a syndicate of banks (the “Credit Agreement”). On August 2, 2021, the Credit Agreement was amended to change the definition of “Qualified IPO” by reducing the net proceeds required to be received by the Company from $1.0 billion to $850.0 million. In addition, prior to such amendment, the Credit Agreement contained a covenant that required the Company to maintain a total debt to capitalization ratio of (a) 0.25 to 1.00 prior to a Qualified IPO, and (b) 0.30 to 1.00 after a Qualified IPO. The Amendment changed this covenant by removing the increase in the ratio after a Qualified IPO such that the Company is now required to maintain a total debt to capitalization ratio of 0.25 to 1.00. On August 4, 2021, we elected to extend the maturity date of the Credit Agreement from February 28, 2022 to February 28, 2024. We utilized a portion of the net IPO proceeds to repay the $200.0 million principal balance of indebtedness outstanding under our revolving credit agreement originally entered into on March 1, 2021 and the associated interest and other costs of $3.2 million. During the second quarter of 2021, we repaid the full amount and as of September 30, 2021, we have no borrowings outstanding under the Credit Agreement. The Credit Agreement also contains a covenant that require us to maintain a minimum liquidity of $150.0 million.
The obligations under the Credit Agreement are secured by substantially all of the assets of the Company and its wholly owned subsidiaries that are designated as guarantors, including a pledge of the equity of each of its subsidiaries. Borrowings under the Credit Agreement accrue interest at the Company’s election either at a rate of: the (i) the sum of (a) the greatest of (1) the Prime Rate (as defined in the Credit Agreement), (2) the rate of the Federal Reserve Bank of New York in effect plus 1∕2 of 1.0% per annum, and (3) London interbank offered rate (“LIBOR”), plus 1% per annum, and (b) a margin of 4.0%; or (ii) the sum of (a) the LIBOR multiplied by a statutory reserve rate and (b) a margin of 5.0%. In addition, the commitment fee is 0.75% of the unused amount of the Credit Agreement.
Furthermore, the Credit Agreement contains covenants that, among other things, restrict the ability of the Company and its subsidiaries to make dividends or other distributions, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates, change its business or make investments. In addition, the Credit Agreement contains other customary covenants, representations and events of default.
Cash and Investments
As of September 30, 2021, we had $956.2 million in cash and cash equivalents, $331.7 million in short-term investments and $681.9 million long-term investments on the consolidated balance sheet. Our cash and investments are held at non-regulated entities and regulated insurance entities.
As of September 30, 2021, we had non-regulated cash and cash equivalents of $207.9 million, short-term investments of $206.8 million and long-term investments of $88.3 million.
As of September 30, 2021, we had regulated insurance entity cash and cash equivalents of $748.3 million, short-term investments of $124.9 million, of which $3.5 million was restricted, and long-term investments of $593.6 million, of which $4.1 million was restricted.
42

Table of Contents
Cash Flows
The following table presents a summary of our cash flows for the periods shown:

| Nine Months Ended September 30,
($ in thousands) | 2021 |  | 2020
Net cash provided by operating activities | $ | 233,114 |  |  | $ | 11,339 |
Net cash used in investing activities | (653,128) |  |  | (528,830) |
Net cash provided by financing activities | 887,832 |  |  | 687,714 |
Net increase in cash and cash equivalents | 467,818 |  |  | 170,223 |
Cash and cash equivalents at beginning of period | 488,371 |  |  | 522,910 |
Cash and cash equivalents at end of period | $ | 956,189 |  |  | $ | 693,133 |

Operating Activities
During the nine months ended September 30, 2021, net cash provided by operating activities increased by $221.8 million compared to the nine-month period ended September 30, 2020, primarily driven by the increase in consumer growth driving the increased medical costs and risk adjustment payables, as well as accounts payables and other liabilities, and increased medical costs in the MA business driven by the Brand New Day and CHP acquisitions, partially offset by an increase in our net loss.
Investing Activities
During the nine months ended September 30, 2021, net cash used in investing activities increased by $124.3 million compared to the nine-month period ended September 30, 2020. The increase was primarily attributable to a $257.6 million increase in cash used for acquisitions, which was partially offset by a decrease in purchases of investments, net of proceeds from sales, paydowns and maturities of investments.
Financing Activities
During the nine months ended September 30, 2021, net cash provided by financing activities increased by $200.1 million compared to the nine-month period ended September 30, 2020, primarily driven by $887.3 million of proceeds from our IPO in June 2021, offset by $6.7 million of cash paid for IPO offering costs, and an increase in proceeds from the issuance of common stock resulting from stock option exercise in the nine months ended September 30, 2021. These increases were partially offset by $686.8 million of proceeds from issuance of preferred stock in the nine months ended September 30, 2020.
Critical Accounting Policies and Estimates
The critical accounting policies that reflect our more significant judgements and estimates used in the preparation of our condensed consolidated financial statements include those described in the Prospectus under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates.”
There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in the Prospectus.
Recently Adopted Accounting Pronouncements
For a description of recently issued accounting pronouncements, see Note 1, Organization and Basis of Presentation, in our condensed consolidated financial statements of this Quarterly Report on Form 10-Q.
43

Table of Contents
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our earnings and financial position are exposed to financial market risk, including those resulting from changes in interest rates.
Interest Risk
The level of our pretax earnings is subject to market risk due to changes in interest rates and the resulting impact on investment income and interest expense. We invest in a professionally managed portfolio of securities, which includes debt securities of publicly traded companies, obligations of the U.S. government, domestic government agencies, and state and political subdivisions. At September 30, 2021 our net unrealized gain position was $0.2 million, compared to a net unrealized gain position of $2.4 million at December 31, 2020.
ITEM 4. CONTROLS AND PROCEDURES
Limitations on effectiveness of controls and procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of disclosure controls and procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2021, our disclosure controls and procedures were not effective due to the material weakness in our internal control over financial reporting described below. In light of this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the condensed consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.
Previously Reported Material Weakness in Internal Control Over Financial Reporting
As disclosed in the section entitled Risk Factors in our Prospectus, we previously identified a material weakness in Brand New Day’s internal control over financial reporting. As of September 30, 2021, we continue to have a material weakness in Brand New Day’s internal control over financial reporting. So far in 2021, we have taken a number of remediation steps to enhance the control environment at Brand New Day, including actions to further centralize accounting and other financial responsibilities, enhance controls, procedures and documentation supporting key accounts and processes, and hire additional resources to oversee accounting, reporting and other activities occurring within Brand New Day. With these improvements, management is now focused on demonstrating consistency in the performance of these controls and procedures from period to period. Additionally, we migrated Brand New Day’s financial accounting and reporting activities over to Bright Health’s legacy enterprise resource planning system in the third quarter of 2021.
Changes in Internal Control over Financial Reporting
We consider the material weakness remediation actions discussed above as changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management continues to advance its remediation program to ensure that control deficiencies contributing to the material weakness are remediated.
44

Table of Contents
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
We are not presently a party to any litigation the outcomes of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows, or financial condition.
Item 1A. Risk Factors
This Quarterly Report on Form 10-Q should be read in conjunction with the risk factors included in our Prospectus. There have been no material changes to the risk factors disclosed under the heading “Risk Factors” in our Prospectus, except for the following risk factor, which supplements the “Risk Factors” section in our Prospectus.
Security incidents or breaches, loss of data and other disruptions to our or our third-party service providers’ systems, information technology infrastructure, and networks could compromise sensitive or legally protected information related to our business or consumers, disrupt our business operations, and expose us to liability, which could adversely affect our business and our reputation.
In the ordinary course of our business, we receive, collect, store, use, process, transmit and disclose (“Process”) sensitive data, including protected health information (“PHI”), and other types of personal data, personal information or personally identifiable information protected by various laws and regulations (collectively, “PII”). We also use third-party service providers to Process PHI, PII, sensitive information and other confidential information, including that of our consumers and service providers. We manage and maintain our technology platform and data using a combination of on-site systems, managed data center systems and cloud-based systems. Because of the sensitivity of the PHI, other PII and other confidential information we and our consumers and service providers process, the security of our technology platform and other aspects of our services, including those provided or facilitated by our third-party service providers, are critically important to our operations and business strategy.
The operation, stability, integrity and availability of our technology platform and underlying network infrastructure are critical to the implementation of our business strategy, our financial results, our brand and reputation, our relationship with our Care Partners, consumers, network providers, broker network, third-party providers and other key constituents. Any system failure, including network, software or hardware failure, that causes an interruption in our network or a decrease in the responsiveness of our technology platform could result in dissatisfaction and a loss of trust with those constituents and adversely impact our business and reputation. Although we have redundancies in place that will permit us to respond, at least to some degree, to service outages, it could take significant time to have all systems fully operational and our third-party cloud providers are also subject to vulnerabilities.
Security incidents and breaches of our infrastructure or our third-party service providers’ infrastructure, including physical or electronic break-ins, computer viruses, ransomware, or other malware, employee or contractor error or malfeasance, can disrupt or shut down our systems, or allow unauthorized access to, or misuse, disclosure, modifications or loss of confidential information, PHI, and other PII. Such breaches could result in legal claims or proceedings, liability under laws and regulations that protect the privacy of PHI or other PII, such as the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the California Consumer Privacy Act (“CCPA”), and other state and federal laws and regulations. We may also be required to notify government authorities, individuals, the media, and other third parties in connection with a security incident or breach involving PHI or other PII, and could become subject to investigations, consent decrees, resolution agreements, monitoring agreements and similar agreements, and civil penalties. We require business associates and other outsourcing subcontractors who handle consumer and patient information to enter into business associate agreements, if applicable, and to agree to use reasonable efforts to safeguard PHI, other PII and other sensitive information. However, these measures may not adequately protect us from the risks associated with the Processing of such information.
In October 2021, one of our subsidiaries, True Health New Mexico, Inc. (“True Health”) experienced a data security incident. Upon learning of the incident, we promptly took steps to secure and contain the impacted True Health systems and supplemented our internal response teams with leading cyber security defense firms and other outside experts. Th ese steps included taking preventative measures, including shutting down certain systems where necessary, as well as taking steps to supplement existing security monitoring, scanning and protective measures. True Health has restored its principal operations with no material day-to-day impact to its operations. Our investigation of the attack is substantially complete, and we are also
45

Table of Contents
working with law enforcement officials on their ongoing criminal investigation of this matter. True Health has notified appropriate governmental authorities and will provide additional notices to impacted parties as required.
In addition, breaches of our security systems or those systems used by our third-party service providers or other cyber security incidents could also result in the misappropriation of confidential or proprietary information of ourselves, our consumers, our patients, or other third parties; viruses, spyware, ransomware or other malware being served from our network, platform or systems; the deletion or modification of content or the display of unauthorized content on our platform; the loss of access to critical data or systems through ransomware, destructive attacks or other means; and business delays, service or system disruptions such as denials of service attacks. For example, although none of our consumers PHI or PII was put at risk, earlier this year, one of our third-party suppliers of certain services was recently subject to a ransomware attack, which caused delays in our claims payment processing to consumers. We cannot guarantee that our recovery protocols and backup systems will be sufficient to prevent data loss now or in the future, or that our remedies against third-party service providers will be sufficient to protect us in the event such service provider suffers a security breach or similar incident.
If we are not or are perceived to not be able to prevent such security breaches or privacy violations or implement acceptable remedial measures, we may be unable to operate our platform, perform our services, provide consumer assistance services, maintain accurate patient medical records, conduct research and development activities, collect, process and prepare company financial information, or provide information about our current and future products. There can be no assurance that we will be able to prevent another security incident such as occurred with True Health or that any future incidents will not have a more significant impact on our operations. There is an increased risk that we may experience cybersecurity-related events such as COVID-19-themed phishing attacks and other security challenges as a result of our employees and service providers working remotely from non-corporate-managed networks during the ongoing pandemic and beyond. The True Health breach and any future such breaches and violations may result in fines and penalties, require us to comply with breach notification laws, require us to verify the accuracy of database contents, and expose us to material operating expenses related to investigation, remediation and resolution of claims, all of which could result in increased costs.
As a result, we could suffer a loss of business and we may suffer reputational harm, adverse impacts on consumer and investor confidence and negative impact to our results of operations.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
On July 1, 2021, we issued 4,388,811 shares of common stock, par value $0.0001 per share, to security holders of Centrum in connection with our acquisition of Centrum. This transaction was deemed exempt from the registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving any public offering. The recipients of the securities in this transaction represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were placed upon the stock certificates issued in this transaction.
Use of Proceeds from Initial Public Offering of Common Stock
On June 28, 2021, we completed our IPO in which we issued and sold 51,350,000 shares of common stock, par value $0.0001 per share, at an offering price of $18.00 per share. The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to the Company’s registration statement on Form S-1 (File No. 333-256286), as amended, which was declared effective by the SEC on June 23, 2021. We received net proceeds of $880.6 million from the sale of our common stock, after deducting underwriting discounts and commissions of $37.0 million and other offering expenses of $6.7 million. We used a portion of the net proceeds from our IPO to repay the $200.0 million principal balance of indebtedness outstanding under our revolving credit facility agreement originally entered into on March 1, 2021 and the associated interest and other costs of $3.2 million. We used $222.4 million to fund the acquisition of Centrum as described in Note 2, Business Combinations. The remainder of the net proceeds will be used for general corporate purposes.
The representatives of the underwriters of our IPO were J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC and Barclays Capital Inc. No payments were made by us to directors, officers, or persons owning ten percent or more of our common stock or to their associates, or to our affiliates, other than payments in the ordinary course of business to officers for salaries and to non-employee directors pursuant to our director compensation policy.
Upon completion of the sale of the shares of our common stock in the IPO, the IPO terminated. There has been no material change in the planned use of proceeds from our IPO from those disclosed in our final prospectus filed with the SEC on June 25, 2021, pursuant to Rule 424(b) under the Securities Act of 1933.
46

Table of Contents
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
EXHIBIT INDEX

Exhibit Number |  | Description
3.1 |  | Ninth Amended and Restated Certificate of Incorporation of Bright Health Group, Inc. (incorporated by reference to Exhibit 4.1 filed with the Registrant’s Registration Statement on Form S-8 filed on June 28, 2021)
3.2 |  | Amended and Restated Bylaws of Bright Health Group, Inc. (incorporated by reference to Exhibit 4.2 filed with the Registrant’s Registration Statement on Form S-8 filed on June 28, 2021)
31.1 |  | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 |  | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 |  | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
32.2 |  | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)
101 |  | The following financial information from our Quarterly Report on Form 10-Q for the third quarter of fiscal 2021, filed with the SEC on November 15, 2021, formatted in Inline Extensible Business Reporting Language (“iXBRL”)
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and embedded within Exhibit 101)

(1) The certifications in Exhibit 32.1 to this Quarterly Report on Form 10-Q shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
47

Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| BRIGHT HEALTH GROUP, INC.
Dated: November 15, 2021 | By: | /s/ G. Mike Mikan
| Name: | G. Mike Mikan
| Title: | Vice Chairman, President and Chief Executive Officer
|  | (Principal Executive Officer)
| By: | /s/ Catherine R. Smith
| Name: | Catherine R. Smith
| Title: | Chief Financial and Administrative Officer
|  | (Principal Financial Officer)
| By: | /s/ Jeffrey J. Scherman
| Name: | Jeffrey J. Scherman
| Title: | Chief Accounting Officer
|  | (Principal Accounting Officer)

48